Criteria: The Corporation must maintain and adhere to documented procurement procedures that must conform to the procurement standards in 2 CFR Sections 200.317 through 200.327. These sections include policies and procedures related to competition, informal and formal procurement methods and noncompetitive procurement. Additionally, in accordance with 2 CFR Section 200.214, the Corporation must verify that vendors are not suspended or debarred from participating in Federal funds. Condition: We noted that there was a lack of evidence that policies and procedures were applied as required under the noted 2 CFR Sections in “Criteria”. Cause: The Corporation did not maintain formal documentation or evidence to support that a competitive price analysis for vendors or that suspension and debarment verifications were performed for vendors, as required by the general procurement standards of the Uniform Guidance. Effect or Potential Effect: We were unable to determine whether charges relating to vendor services or goods charged to the Federal programs are in accordance with 2 CFR Sections 200.317 through 200.327 or 200.214. Questioned costs: None Context: The Corporation was unable to provide evidence of procurement, suspension or debarment verification performed for walkthrough purposes or any samples that would be selected. Additionally, per management, no written documentation can be provided for any sole source procurements. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-010 in the 2021 report. Recommendation: We recommend the Corporation establish formal internal controls, and documentation of their performance, relating procurement, required price analysis of vendors, and suspension and debarment verifications. View of Responsible Officials: Due to turnover of several key financial executives and personnel and lack of formal documentation of current policies and procedures, the Corporation was unable to provide evidence of procurement, suspension or debarment verification performed as of December 31, 2022.
Criteria: The Corporation must maintain and adhere to documented procurement procedures that must conform to the procurement standards in 2 CFR Sections 200.317 through 200.327. These sections include policies and procedures related to competition, informal and formal procurement methods and noncompetitive procurement. Additionally, in accordance with 2 CFR Section 200.214, the Corporation must verify that vendors are not suspended or debarred from participating in Federal funds. Condition: We noted that there was a lack of evidence that policies and procedures were applied as required under the noted 2 CFR Sections in “Criteria”. Cause: The Corporation did not maintain formal documentation or evidence to support that a competitive price analysis for vendors or that suspension and debarment verifications were performed for vendors, as required by the general procurement standards of the Uniform Guidance. Effect or Potential Effect: We were unable to determine whether charges relating to vendor services or goods charged to the Federal programs are in accordance with 2 CFR Sections 200.317 through 200.327 or 200.214. Questioned costs: None Context: The Corporation was unable to provide evidence of procurement, suspension or debarment verification performed for walkthrough purposes or any samples that would be selected. Additionally, per management, no written documentation can be provided for any sole source procurements. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-010 in the 2021 report. Recommendation: We recommend the Corporation establish formal internal controls, and documentation of their performance, relating procurement, required price analysis of vendors, and suspension and debarment verifications. View of Responsible Officials: Due to turnover of several key financial executives and personnel and lack of formal documentation of current policies and procedures, the Corporation was unable to provide evidence of procurement, suspension or debarment verification performed as of December 31, 2022.
Criteria: The Corporation must maintain and adhere to documented procurement procedures that must conform to the procurement standards in 2 CFR Sections 200.317 through 200.327. These sections include policies and procedures related to competition, informal and formal procurement methods and noncompetitive procurement. Additionally, in accordance with 2 CFR Section 200.214, the Corporation must verify that vendors are not suspended or debarred from participating in Federal funds. Condition: We noted that there was a lack of evidence that policies and procedures were applied as required under the noted 2 CFR Sections in “Criteria”. Cause: The Corporation did not maintain formal documentation or evidence to support that a competitive price analysis for vendors or that suspension and debarment verifications were performed for vendors, as required by the general procurement standards of the Uniform Guidance. Effect or Potential Effect: We were unable to determine whether charges relating to vendor services or goods charged to the Federal programs are in accordance with 2 CFR Sections 200.317 through 200.327 or 200.214. Questioned costs: None Context: The Corporation was unable to provide evidence of procurement, suspension or debarment verification performed for walkthrough purposes or any samples that would be selected. Additionally, per management, no written documentation can be provided for any sole source procurements. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-010 in the 2021 report. Recommendation: We recommend the Corporation establish formal internal controls, and documentation of their performance, relating procurement, required price analysis of vendors, and suspension and debarment verifications. View of Responsible Officials: Due to turnover of several key financial executives and personnel and lack of formal documentation of current policies and procedures, the Corporation was unable to provide evidence of procurement, suspension or debarment verification performed as of December 31, 2022.
Finding 2022-002: Material Weakness – Lack of Documentation on Sole Source Contracts and Verification of Vendors Federal grantor: Department of Commerce Condition: The Chamber contract with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Chamber did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Chamber’s Procurement Policy allows for a sole source vendor but requires staff to document sole source procurements prior to initial purchase. It appears staff did not follow its policy. The Policy also contains a requirement to verify or receive vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements, but this procedure was not followed. Effect: The Department of Commerce may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Chamber review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with this finding and is in the process of implementing changes to their procurement process.
Information on the Federal Program(s): 10.760 Water and Waste Disposal Systems for Rural Communities, Department of Agriculture 14.228 Community Development Block Grants/State’s Program, Department of Housing and Urban Development Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2022. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions. Views of Responsible Officials and Planned Corrective Action: The City has identified federal grants subject to the Uniform Guidance and will develop written policies and procedures which include the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions.
Information on the Federal Program(s): 10.760 Water and Waste Disposal Systems for Rural Communities, Department of Agriculture 14.228 Community Development Block Grants/State’s Program, Department of Housing and Urban Development Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2022. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions. Views of Responsible Officials and Planned Corrective Action: The City has identified federal grants subject to the Uniform Guidance and will develop written policies and procedures which include the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions.
Information on the Federal Program(s): 10.760 Water and Waste Disposal Systems for Rural Communities, Department of Agriculture 14.228 Community Development Block Grants/State’s Program, Department of Housing and Urban Development Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2022. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions. Views of Responsible Officials and Planned Corrective Action: The City has identified federal grants subject to the Uniform Guidance and will develop written policies and procedures which include the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions.
Assistance Listing, Federal Agency, and Program Name 93.224, 93.527; COVID 19: Health Center Program Cluster Federal Award Identification Number and Year H80CS24134, H8ECS37956, H8FCS40356, and H8GCS48255 2022 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria In accordance with 2 CFR sections 200.318 200.326, the Organization must maintain and use documented procedures for procurement transactions that are consistent with State, local, and tribal laws and regulations and the standards identified in CFR sections 200.317 through 200.327. The Organization must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Additionally, in accorance with 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209 6, the Organization must verify that the person with whom you intend to do business is not excluded or disqualified. Condition Policies and procedures in place over procurement, suspension, and debarment are not in conformance with Uniform Guidance. Additionally, the Organization did not procure in accordance with the regulations, including maintaining records sufficient to detail the history of each procurement transaction nor did they comply with suspension and debarement rules. Questioned Costs $1,121,985 Identification of How Questioned Costs Were Computed Questioned costs resulted from the Organization not maintaining or using the required procurement procedures over non payroll expenditures. Total non payroll expenditures included on the SEFA total $1,121,985. Context For all four contracts selected for testing, there were no records manintained to support procurement method, contract selection, or verification the entity was not suspended or disbared. Upon further procedures, we identified that the Organization did not follow any procurement guidelines in procuring all non payroll transactions. Cause and Effect There are no procurement, suspension, and debarement policies in place. As a result, no procedures are being completed over these compliance categories and thus the Organization did not comply with the related compliance requirements. Recommendation We recommend the Organization implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance and follow those policies. Views of Responsible Officials and Planned Corrective Actions The Organization will implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance.
Assistance Listing, Federal Agency, and Program Name 93.224, 93.527; COVID 19: Health Center Program Cluster Federal Award Identification Number and Year H80CS24134, H8ECS37956, H8FCS40356, and H8GCS48255 2022 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria In accordance with 2 CFR sections 200.318 200.326, the Organization must maintain and use documented procedures for procurement transactions that are consistent with State, local, and tribal laws and regulations and the standards identified in CFR sections 200.317 through 200.327. The Organization must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Additionally, in accorance with 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209 6, the Organization must verify that the person with whom you intend to do business is not excluded or disqualified. Condition Policies and procedures in place over procurement, suspension, and debarment are not in conformance with Uniform Guidance. Additionally, the Organization did not procure in accordance with the regulations, including maintaining records sufficient to detail the history of each procurement transaction nor did they comply with suspension and debarement rules. Questioned Costs $1,121,985 Identification of How Questioned Costs Were Computed Questioned costs resulted from the Organization not maintaining or using the required procurement procedures over non payroll expenditures. Total non payroll expenditures included on the SEFA total $1,121,985. Context For all four contracts selected for testing, there were no records manintained to support procurement method, contract selection, or verification the entity was not suspended or disbared. Upon further procedures, we identified that the Organization did not follow any procurement guidelines in procuring all non payroll transactions. Cause and Effect There are no procurement, suspension, and debarement policies in place. As a result, no procedures are being completed over these compliance categories and thus the Organization did not comply with the related compliance requirements. Recommendation We recommend the Organization implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance and follow those policies. Views of Responsible Officials and Planned Corrective Actions The Organization will implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance.
Assistance Listing, Federal Agency, and Program Name 93.224, 93.527; COVID 19: Health Center Program Cluster Federal Award Identification Number and Year H80CS24134, H8ECS37956, H8FCS40356, and H8GCS48255 2022 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria In accordance with 2 CFR sections 200.318 200.326, the Organization must maintain and use documented procedures for procurement transactions that are consistent with State, local, and tribal laws and regulations and the standards identified in CFR sections 200.317 through 200.327. The Organization must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Additionally, in accorance with 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209 6, the Organization must verify that the person with whom you intend to do business is not excluded or disqualified. Condition Policies and procedures in place over procurement, suspension, and debarment are not in conformance with Uniform Guidance. Additionally, the Organization did not procure in accordance with the regulations, including maintaining records sufficient to detail the history of each procurement transaction nor did they comply with suspension and debarement rules. Questioned Costs $1,121,985 Identification of How Questioned Costs Were Computed Questioned costs resulted from the Organization not maintaining or using the required procurement procedures over non payroll expenditures. Total non payroll expenditures included on the SEFA total $1,121,985. Context For all four contracts selected for testing, there were no records manintained to support procurement method, contract selection, or verification the entity was not suspended or disbared. Upon further procedures, we identified that the Organization did not follow any procurement guidelines in procuring all non payroll transactions. Cause and Effect There are no procurement, suspension, and debarement policies in place. As a result, no procedures are being completed over these compliance categories and thus the Organization did not comply with the related compliance requirements. Recommendation We recommend the Organization implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance and follow those policies. Views of Responsible Officials and Planned Corrective Actions The Organization will implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance.
Assistance Listing, Federal Agency, and Program Name 93.224, 93.527; COVID 19: Health Center Program Cluster Federal Award Identification Number and Year H80CS24134, H8ECS37956, H8FCS40356, and H8GCS48255 2022 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria In accordance with 2 CFR sections 200.318 200.326, the Organization must maintain and use documented procedures for procurement transactions that are consistent with State, local, and tribal laws and regulations and the standards identified in CFR sections 200.317 through 200.327. The Organization must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Additionally, in accorance with 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209 6, the Organization must verify that the person with whom you intend to do business is not excluded or disqualified. Condition Policies and procedures in place over procurement, suspension, and debarment are not in conformance with Uniform Guidance. Additionally, the Organization did not procure in accordance with the regulations, including maintaining records sufficient to detail the history of each procurement transaction nor did they comply with suspension and debarement rules. Questioned Costs $1,121,985 Identification of How Questioned Costs Were Computed Questioned costs resulted from the Organization not maintaining or using the required procurement procedures over non payroll expenditures. Total non payroll expenditures included on the SEFA total $1,121,985. Context For all four contracts selected for testing, there were no records manintained to support procurement method, contract selection, or verification the entity was not suspended or disbared. Upon further procedures, we identified that the Organization did not follow any procurement guidelines in procuring all non payroll transactions. Cause and Effect There are no procurement, suspension, and debarement policies in place. As a result, no procedures are being completed over these compliance categories and thus the Organization did not comply with the related compliance requirements. Recommendation We recommend the Organization implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance and follow those policies. Views of Responsible Officials and Planned Corrective Actions The Organization will implement written policies and procedures over procurement, suspension, and debarement that conform with Uniform Guidance.
Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR 200.317 - 200.327. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR 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 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR 200.323(b)). 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.” Although the Village contracted with a consultant to assist the Village with compliance with various procurement compliance requirements, the Village does not have any formal policies in place regarding procurement requirements. We recommend that the Village adopt formal policies and procedures that address procurement requirements.
U.S. Department of the Treasury State of New Jersey Department of Community Affairs COVID-19 Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number and Years: G2022-09 (03/02/2021 – 12/31/2024) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: No Finding Type: Material Weakness, Material Non-compliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. Also, in accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass-through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full-time employees responding to COVID-19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Additionally, in accordance with Federal requirements, a non-Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to the State of New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While the expenditures per the SEFA as prepared by the System was accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures were based upon purchase order amounts, which includes expenditures that were incurred subsequent to year-end. Procurement The System has procurement policies and guidelines that are in accordance with the respective provisions of the Uniform Guidance. The System contracted with multiple vendors for several projects under the G2022-09 grant that were above the micro purchase threshold of $10,000, but below the simplified acquisition threshold of $250,000. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market as per the System’s prescribed procurement policies and guidelines. The vendors were not suspended or debarred and the associated expenditures with these vendors incurred in fiscal year 2022 were determined to be allowable. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System’s report of expenditures submitted to the Department includes a reconciliation between incurred expenditures and purchase order balances or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management’s review of the submitted tracking report of expenditures did not identify the need for a reconciliation of incurred expenditures and purchase order balances reported to the Department and as such, as there is a variance between the amounts reported on the SEFA and the amounts reported to the Department on the quarterly reports of approximately $2.2 million. Additionally, they System did not retain or obtain the required documentation for procurements entered into with vendors for the grant in accordance with the System’s procurement policies and guidelines. Effect The System had a material variance in the amount of expenditures reported to the Department as compared to the SEFA, as well as did not comply with Federal regulations or its own policies and guidelines for procurement transactions and related document retention. Questioned costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure the tracking report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period based upon the general ledger and accounting records, used to prepare the annual SEFA, as compared to the purchase order balances. Procurement We recommend that the System strengthen its processes and internal controls to ensure the System obtains and retains the required documentation for each procurement based upon the type of procurement and dollar thresholds. View of Responsible Official Management agrees with the auditor’s recommendation and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances. In addition, Management will strengthen its processes and internal controls to ensure the System obtains and retains the required documentation for each procurement based upon the type of procurement and dollar thresholds.
Finding 2022-003 Information on the Federal Program: Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirement: Procurement and Suspension and Debarment. Type of Finding: Significant deficiency in internal control over major federal programs. Criteria: Uniform Guidance requirements indicate recipients must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Condition: We noted one expenditure for which general procurement policies and procedures related to obtaining a bid were not followed prior to entering into a contract with a vendor. Cause: County staff are not familiar enough with County procurement policies and procedures. Effect or Potential Effect: The County has a significant deficiency in internal control with respect to its procurement policies and procedures which could result in significant noncompliance or questioned costs in the future. Recommendation: County management should ensure that procurement policies and procedures are being following by all County personnel. In addition, we recommend that County management provide training related to procurement policies and procedures to all County personnel with the ability to enter into a contract
Finding 2022-003 Information on the Federal Program: Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirement: Procurement and Suspension and Debarment. Type of Finding: Significant deficiency in internal control over major federal programs. Criteria: Uniform Guidance requirements indicate recipients must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Condition: We noted one expenditure for which general procurement policies and procedures related to obtaining a bid were not followed prior to entering into a contract with a vendor. Cause: County staff are not familiar enough with County procurement policies and procedures. Effect or Potential Effect: The County has a significant deficiency in internal control with respect to its procurement policies and procedures which could result in significant noncompliance or questioned costs in the future. Recommendation: County management should ensure that procurement policies and procedures are being following by all County personnel. In addition, we recommend that County management provide training related to procurement policies and procedures to all County personnel with the ability to enter into a contract
U.S. Department of the Treasury Passed through State of Arizona, Maricopa County (Maricopa County), Federal Financial Assistance Listing #21.027, PE386182260A4 2022, Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Foundation is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non‐Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Foundation did not retain documentation to support performance a price analysis nor provide the opportunity for open competition. Additionally, the Foundation did not review for suspension or debarment and required contract provisions were not followed. Cause: The Organization has limited staffing and did not have proper controls in place relating to review of procurement. Effect: Improper expenses may be paid and charged to the federal program and covered transactions could be potentially entered into with suspended or debarred parties. Questioned Costs: Questioned costs were unable to be determined. Context: A nonstatistical sample of 12 transactions out of 60 total transactions were selected for testing totaling $148,605 of $275,567 procurement expenditures. Repeat Finding from Prior Years: No Recommendation: We recommend the Foundation follow designed control processes which includes performing required procurement procedures and maintaining within the procurement file documentation of a review to ensure the party to the covered transaction is not suspended or debarred. Views of Responsible Officials: Management agrees with the finding.
U.S. Department of the Treasury Passed through State of Arizona, Maricopa County (Maricopa County), Federal Financial Assistance Listing #21.027, PE386182260A4 2022, Coronavirus State and Local Fiscal Recovery Funds Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements, to assure performance expectations are being achieved, and to report these items in accordance with program requirements. The Foundation is required to submit quarterly performance reports. Reports should be prepared complete, accurate, and in accordance with the required basis for reporting, submitted timely with the terms of the grant award, and reviewed by an individual prior to submission to ensure accuracy. Condition: Although the reports were reviewed in accordance with internal controls, the review process did not properly identify on two out of the two reports tested that they were submitted with inaccurate information. Supporting documentation for the reports submitted used budgeted expensed amounts, not actual, and the budgeted expensed amounts for the period did not agree to amounts reported. Cause: The Organization has limited staffing and did not have proper controls in place relating to review of information included in reports to ensure completeness and accuracy. Effect: Inaccurate information may be provided to the grantor regarding performance of the Foundation. Questioned Costs: None reported. Context: A nonstatistical sample of 2 out of 4 reports submitted were selected for testing. Repeat Finding from Prior Years: No Recommendation: We recommend the Foundation’s management routinely review and consider modifications that would strengthen the internal controls surrounding the reporting process, recordkeeping, and the management thereof. Specifically, management should ensure that financial records are such to provide actual amounts of grant expenditures incurred for reporting purposes at required reporting dates, and that the review control ensures that reports provided to grantors agree with internal financial records. Views of Responsible Officials: Management agrees with the finding.
FINDING 2022-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Pass-Through Entity: Department of the Treasury Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. Indiana Code provides that the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Six vendors fell within the simplified acquisition threshold. All six vendors were selected for testing. For three of the vendors tested, there were no requests for proposals received and no documentation to support the history of the procurement, including the rationale for the method of procurement, nor selection of the contract. In addition, there was no documentation that a cost or price analysis was performed for the three contracts. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.324(a) states: "The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals." 2 CFR 200.320 states in part: "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. . . . INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. . . ." INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The system of internal controls as established by the City was not properly implemented to ensure that goods and services that exceeded the simplified acquisition threshold were properly procured. A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper procurement procedures were not adhered to for all vendors. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls, and develop policies and procedures to ensure proper procurement procedures are adhered to for all purchases of good and services paid with federal awards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Information on the Federal Program: Assistance Listing Number 10.763—Emergency Community Water Assistance Grants, United States Department of Agriculture. Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2022. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions.
Information on the Federal Program: Assistance Listing Number 10.763—Emergency Community Water Assistance Grants, United States Department of Agriculture. Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2022. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions.
2022-001: Procurement Requirements Criteria: The Organization is required to establish a procurement policy in accordance with Uniform Guidance requirements, as specified in the compliance supplement. Condition: The Organization did not establish a procurement policy in accordance with Uniform Guidance 2 CFR 200.318 ? 200.327, as required for the major program. The Organization developed and implemented a policy during 2022 but it was not in effect for the whole organization for the entire year. Questioned costs: None Cause and Effect: By not having an updated procurement policy the Organization could expense funds that are not in accordance with the procurement policies established by Uniform Guidance Recommendation: We recommend the Organization establish a procurement policy based on the requirements noted in 2 CFR 200.318-200.327. Auditee Response: The Organization established and implemented a procurement policy in accordance with Uniform Guidance requirements during the year in 2022.
2022-001: Procurement Requirements Criteria: The Organization is required to establish a procurement policy in accordance with Uniform Guidance requirements, as specified in the compliance supplement. Condition: The Organization did not establish a procurement policy in accordance with Uniform Guidance 2 CFR 200.318 ? 200.327, as required for the major program. The Organization developed and implemented a policy during 2022 but it was not in effect for the whole organization for the entire year. Questioned costs: None Cause and Effect: By not having an updated procurement policy the Organization could expense funds that are not in accordance with the procurement policies established by Uniform Guidance Recommendation: We recommend the Organization establish a procurement policy based on the requirements noted in 2 CFR 200.318-200.327. Auditee Response: The Organization established and implemented a procurement policy in accordance with Uniform Guidance requirements during the year in 2022.
2022-001: Procurement Requirements Criteria: The Organization is required to establish a procurement policy in accordance with Uniform Guidance requirements, as specified in the compliance supplement. Condition: The Organization did not establish a procurement policy in accordance with Uniform Guidance 2 CFR 200.318 ? 200.327, as required for the major program. The Organization developed and implemented a policy during 2022 but it was not in effect for the whole organization for the entire year. Questioned costs: None Cause and Effect: By not having an updated procurement policy the Organization could expense funds that are not in accordance with the procurement policies established by Uniform Guidance Recommendation: We recommend the Organization establish a procurement policy based on the requirements noted in 2 CFR 200.318-200.327. Auditee Response: The Organization established and implemented a procurement policy in accordance with Uniform Guidance requirements during the year in 2022.
2022-001 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Mortgage Insurance Rental Housing Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CRF 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The non-Federal entity?s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contactor registry. Condition: The Project does not have a written procurement policy which conforms to Uniform Guidance as outlined above. During the year, management entered into transactions over the micropurchase threshold with eight vendors. Documentation was unable to be provided to support procurement compliance for seven vendors. In addition, there was one vendor with expenditures in excess of $25,000 and the Project did not verify the vendor against the central contractor registry prior to entering into the transaction or on a periodic basis to ensure that the vendor was not suspended or debarred. Cause: Management does not have a written procurement policy in accordance with Uniform Guidance. Certain procedures were in place; however, without a written policy to follow, the auditors were unable to determine if the procedures for procurement, suspension, and debarment compliance for the vendors was adequate. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Project would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: We were unable to determine known questioned costs. During the year, management entered into transactions over the micropurchase threshold with eight vendors totaling approximately $92,000. Context/Sampling: No sampling was used. Procurement requirements were applicable to 8 transactions (all transactions were reviewed and tested) and suspension and debarment requirements were applicable to one vendor. Repeat Finding from Prior Year: No Recommendation: We recommend management review the procurement policy requirements under Uniform Guidance and adopt a procurement policy in accordance with Uniform Guidance requirements. In addition, we also recommend management implement formal procedures over procurement, suspension and debarment in accordance with that policy and retain sufficient documentation to support the process was followed. Views of Responsible Officials: Management agrees with the finding and recommendation.
FINDING 2022-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP2971 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the County to ensure compliance with the requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement The County's purchasing policy did not reflect applicable state laws and regulations. In addition, the policy did not include procedures to avoid acquisition of unnecessary or duplicative items, or procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Suspension and Debarment Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the County to review the procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the County divulged that it was unaware of the suspension and debarment requirements related to the SLFRF awards. A population of four covered transactions, totaling $990,897, that equaled or exceeded $25,000 paid from SLFRF funds during the audit period was identified. For each of the four transactions, the County did not verify the suspension and debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors and subrecipients were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327." 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors and subrecipients to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of Federal regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Additionally, we recommend the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-002: Procurement and Suspension and Debarment Identification of federal program: Program Title: Agriculture Research Basic and Applied Research Assistance Listing Number: 10.001 Award Identification: CA 59-8082-0-001 Federal Agency: U.S. Department of Agriculture, Agriculture Research Service Criteria or Specific Requirement: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During testing for the Fund?s controls on compliance over procurement and suspension and debarment, the Fund could not provide a procurement policy that is in compliance with prescribed standards in the Uniform Guidance. Additionally, suspension and debarment verifications were not performed prior to entering a covered transaction. Cause: The Fund has not updated its procurement policy to fully conform with Uniform Guidance, including policies over suspension and debarment. Effect: The Fund was not in compliance with the procurement policy requirements of Uniform Guidance, specifically around suspension and debarment. Questioned Costs: None Context: The Fund currently does not have a procurement policy that fully complies with Uniform Guidance requirements addressed in Chapter 2 Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Repeat finding: No Recommendation: The Fund should ensure its documented procurement procedures conform to the procurement standards identified in 2 CFR section ?? 200.317 through 200.327, and also address suspension and debarment. Views of responsible individuals: Management concurs with and will implement the recommendation. See corrective action plan.
2022-002 Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of State Assistance Listing Number: 19.706 Assistance Listing Name: Partnership for Regional East Africa Counterterrorism Award Numbers: Direct Award Numbers Award Period SLMAQM20CA2264 September 28, 2020 through March 29, 2024 SLMAQM20GR2364 September 28, 2020 through September 30, 2024 Criteria: CFR Section ?200.510(b) states in part: ?The auditee must also prepare a schedule of expenditures of Federal awards 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, BDO identified two awards whose assistance listing number was changed by the federal entity in award amendments issued prior to December 31, 2022. Management failed to update the assistance listing number for the awards within the SEFA to address the award modifications. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. The Organization did not adequately review award modifications for changes to existing awards. Effect: The SEFA initially provided to BDO resulted in incorrect major program selection as prescribed under the Unform Guidance. During the review of the award agreements, BDO identified the assistance listing numbers for the two awards had been modified. This issue resulted in a different major program selection once the SEFA was updated to reflect the correct assistance listing numbers. Repeat Finding: This finding is not a repeat finding from prior year. Recommendation: We recommend management to continue to focus on training for both preparer and reviewers 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 proscribed.
2022-002 Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of State Assistance Listing Number: 19.706 Assistance Listing Name: Partnership for Regional East Africa Counterterrorism Award Numbers: Direct Award Numbers Award Period SLMAQM20CA2264 September 28, 2020 through March 29, 2024 SLMAQM20GR2364 September 28, 2020 through September 30, 2024 Criteria: CFR Section ?200.510(b) states in part: ?The auditee must also prepare a schedule of expenditures of Federal awards 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, BDO identified two awards whose assistance listing number was changed by the federal entity in award amendments issued prior to December 31, 2022. Management failed to update the assistance listing number for the awards within the SEFA to address the award modifications. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. The Organization did not adequately review award modifications for changes to existing awards. Effect: The SEFA initially provided to BDO resulted in incorrect major program selection as prescribed under the Unform Guidance. During the review of the award agreements, BDO identified the assistance listing numbers for the two awards had been modified. This issue resulted in a different major program selection once the SEFA was updated to reflect the correct assistance listing numbers. Repeat Finding: This finding is not a repeat finding from prior year. Recommendation: We recommend management to continue to focus on training for both preparer and reviewers 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 proscribed.
Finding 2022-004: Procurement, Suspension and Debarment Identification of the federal program: Equitable Sharing Program, ALN 16.922 Criteria: Compliance Requirement I, Procurement, Suspension and Debarment, Part 4 of the 2022 Compliance Supplement states that, ?Although 2 CFR section 200.317-200.327 are not applicable, the Guide, Section VI.A.., requires agencies to follow their own jurisdiction?s procurement policies? and that Suspension and Debarment ? 2 CFR section 180.200-225 is applicable. In addition, the 2022 Compliance Supplement states that ?program policy and procedures are set forth in the Guide to Equitable Sharing for State, Local, and Tribal Law Enforcement Agencies (Guide) (July 2018) as well as Equitable Sharing Wires (Wires). The September 30, 2021 edition of the Wire (used to update the Guide) states that, ??local law enforcement agencies participating in the Department of Justice and Department of Treasury Equitable Sharing Program must verify that vendors are registered in the System for Award Management (SAM) and are in good standing. A vendor in good standing means the vendor is not suspended or debarred from receiving federal funds. This requirement applies to all qualifying purchases. A qualifying purchase is one single payment or multiple payments to a vendor that exceeds $25,000 annually.? Condition: Condition 1: The County purchased office furniture and equipment from a vendor totaling $64,518. Under the County?s purchasing policy, competitive bids were required; however, competitive bid documents were not present in the county?s paid bills files and there was no other documentation of competitive bids being solicited or received, or justification for not receiving bids, which the policy requires to be documented if bids cannot be obtained. Condition 2: The purchase noted in Condition 1, plus an additional purchase of $34,702 from another vendor were above the $25,000 threshold for vendor verification in the SAM system. Neither vendor was verified by the County to be registered and in good standing in the SAM system. Cause: Condition 1: There was an inadvertent disregard of the bidding requirement by the department head for the $64,518 purchase of office equipment, since the purchase was from a regularly used county vendor who offers government discounts. When the disbursement was processed by the County Clerk, there was a failure to recognize there was a bidding requirement prior to the purchase and a failure of the internal control in disbursement processing which identifies purchase subject to county bid requirements and determines if bid documents are present in supporting documents. Condition 2: There were no policy, procedures or internal controls in place for this requirement, as county personnel were not aware of the requirement. The County Attorney has also been unable to establish an account with SAM, even after engaging a consultant to assist, as the system will not allow multiple log ins for the same entity. Effect of Potential Effect: Denial or extinguishment of sharing requests; temporary or permanent exclusion from the Program; freeze on receipt and/or expenditure of shared funds; return of funds or offsets from future sharing. Questioned Costs: The questioned costs for Condition 1 were $64,518, the amount of the transaction noted in Condition 1. The vendors for these two transactions were determined by the auditor to be vendors in good standing in the SAM system; therefore, Condition 2 does not result in additional questioned costs. Context: There were no other transactions in the population of 2022 expenditures in the major program meeting the county?s bidding threshold requirement or the SAM vendor verification threshold for this program. Recommendation: Condition 1: All department heads should follow the existing procurement policy of the county with respect to bidding. The existing review of documentation by the Clerk?s department to ensure compliance with county bidding requirements should always be properly performed and any exceptions to it referred to the governing body, if necessary, prior to processing of disbursement. Condition 2: A policy and procedure should be developed to ensure compliance with the requirement to verify qualifying status of vendors with annual transactions of $25,000 or more. If department heads are unable to access the SAM system to verify vendor qualification, there should be a request forwarded to the County Clerk to do the verification prior to order of goods or services. Views of responsible officials: The Clerk and the County Attorney concur.
Finding 2022-002: Reportable Finding Considered a Significant Deficiency ? Procurement compliance Program Name: Market Access Plan Assistance listing #: 10.601 Federal Awarding Agency: U.S. Department of Agriculture Award Number: 12-4336-0-3-999 Compliance Requirement: Procurement, Suspension, and Debarment Criteria: According to 2 CFR 200.318(a) non-federal entities must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of 2 CFR 200.318 through 200.327, for the acquisition of property or services required under a Federal award. Condition: During our testing of vendor procurement compliance, we noted the entity had a procurement policy in line with the federal award?s specific procurement guidelines but not in line with standards of 2 CFR 200.318 through 200.327. In particular, the policy did not address methods of procurement based on micro-purchase, small purchase, and simplified acquisition purchase thresholds, circumstances in which noncompetitive procurement could be used, and procedures for verifying that a vendor with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The auditee was not aware of the requirements outlined in 2 CFR 200.318 through 200.327, and believed the contracting guidelines outlined for their specific award were sufficient. Effect: The auditee was not in compliance with procurement policies outlined in of 2 CFR 200.318 through 200.327. There was a lack of full and open competition and auditee did not ensure the vendors with which it planned to enter into a covered transaction were not debarred, suspended, or otherwise excluded. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization adopt an updated procurement policy in line with 2 CFR 200 requirements and ensure all staff involved in the acquisition of property or services charged to federal grants are aware of relevant procurement requirements. Views of Responsible Officials and Corrective Action Plan (unaudited): See corrective action plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: State of Arizona, the Office of the Governor Pass-Through Number(s): GR-ARPA-HHF-030122-01 and GR-ARPA-090121-01 Award Period: January 1, 2022 ? November 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: The Organization did not maintain a formalized and written procurement policy. In addition, the Organization did follow the required solicitation process as follows: 1. Small purchase procedures for one vendor, with costs between $10,000 and $250,000 related to grant management and financial oversight, were not performed. 2. Formal procurement methods or noncompetitive procurement procedures for one vendor, with costs exceeding $250,000 related to mental health services, were not performed. The Organization contracted with this mental health vendor prior to accepting the Coronavirus State and Local Fiscal Recovery Funds and subsequently did not go through formal procurement procedures. 3. For two vendors, procedures to determine that the vendors were not included on the suspended or debarred vendor list maintained by the General Services Administration, were not performed. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 ? Internal Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.318 (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. In accordance with 2 CFR 200.320 (a)(2)(i), 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. 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. Criteria or specific requirement (Continued) In accordance with 2 CFR 200.320 (b)(1 and 2), 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. Formal procurement methods - when the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) sealed bids, or (2) proposals. In accordance with 2 CFR 200.320 (c), 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. Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement - can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. In accordance with 2 CFR 180.220, the non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Questioned costs: None Cause: The Organization did not have established procurement policies and did not have internal controls designed to ensure compliance with those policies. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of Federal Regulations related to procurement and suspension and debarment provisions. Repeat Finding: No Recommendation: We recommend that the Organization adopt a formal and written procurement policy. Additionally, management should develop controls to help ensure procurement procedures are followed and to monitor the amount spent with vendors throughout the year to ensure procurement procedures are initiated when the vendor costs exceed the procurement thresholds. These procedures will help ensure compliance with Compliance Supplement and the Code of Federal Regulations related to procurement and suspension and debarment provisions. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Award Period: March 3, 2021 ? December 31, 2024 Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury?s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. All other entities under the program, including subrecipients of a state, must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Condition: During our testing of internal control over procurement for CSLFRF, we noted the City did not have effective control over compliance. Questioned costs: None. Context: In our sample of five cases, there was one instance where the City did not follow its procurement policies and procedures. Cause: The City did not have adequate controls in place to ensure contracts it entered into followed its procurement policies and procedures. Effect: The City could obtain property and services in a manner that does not allow for cost-effectiveness nor providing full and open competition. Repeat Finding: No. Recommendation: We recommend the City implement controls to ensure its procurement policies and procedures are followed prior to entering into contracts. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2022-001: Significant deficiency in internal control over procurement. Federal Agency Program: U.S. Department of Treasury, Passed through State of Oregon ? Department of Administrative Services Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Award Period: January 1, 2022 ? December 31, 2022 Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.318 requires that non-Federal entities must have and use documented procurement procedures, which must conform to the procurement standards in 2 CFR Part 200.318 through 200.327. Procurement procedures must reflect applicable State and local laws and regulations and compliance with the award terms and conditions. The Federal Award agreement stipulated the Organization to require its contractors and sub-contractors to pay the applicable prevailing wage rate. Condition: During the audit, we noted that the Organization was not able to provide documentation to demonstrate that a contractor was required to comply with the prevailing wage requirement in one contract awarded under the Federal Award. Context: There was one contract awarded under the Federal Award, which was selected for testing. Cause: The Organization received increased support during the year ended December 31, 2022, increasing the complexities of compliance with Federal awards. Policies and procedures over procurement were not adequately documented. Effect: Without adequate written policies and procedures over procurement, there is an increased risk of non-compliance with the procurement requirements of 2 CFR 200 and with the terms and conditions of Federal Awards. Questioned costs: None. Repeat Finding: No. Recommendation: The Organization should update its written policies and procedures over procurement consistent with the framework set forth by 2 CFR 200 to ensure compliance with procurement requirements and terms and conditions of Federal Awards. Views of Responsible Officials: Management notes the details of this finding. Management will implement procedures to mitigate the outlined issues in our Corrective Action Plan.
Criteria: Non-federal entities are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance in 2 CFR sections 200.318 through 200.327 as well as verifying such contractors are not suspended, debarred or otherwise excluded pursuant to 31 CFR section 19.300. Condition: FamilyForward was selected to receive funds by the awarding entity in a non-competitive manner subsequent to the solicitation of bids for the construction of the campus for training and research on trauma informed care, which was the requirement per the contract. Accordingly, the procurement policies and procedures as well as the suspension and debarment procedures were not performed in accordance with Uniform Guidance. FamilyForward was determined to be uniquely qualified as a single feasible source as the only eligible entity to receive funds appropriated by the awarding entity. The construction vendor FamilyForward contracted with prior to the award of funds was not on the suspension and debarment list. FamilyForward provided a copy of the campus construction contract to the awarding entity as required prior to disbursement of funds. Effect: The competitive bidding procedures were performed at the subcontractor level by the general contractor however were not performed at the non-federal entity level. Cause: Award of funds was received after the contract agreements were solicited. Recommendation: While procurement processes appear to be completed, it does not appear procurement processes were completed was done under applicable Uniform Guidance. We recommend if grant funding is received for projects already in process, the procurement be discussed with the grantor and process/procedure be agreed upon to maintain compliance under the grant.
Criteria or Specific Requirements: In accordance with 2 CFR ?200.327 and 45 CFR ?75.341, final Federal Financial Reports (FFR) should be submitted within 90 days after the end of each grant period. Condition: During the review of the reporting compliance requirement related to major program, it was determined that the FFR was not submitted within the required deadline. Effect: Failure to submit the FFR by the 90 day submission deadline results in noncompliance with 2 CFR ?200.327 and 45 CFR ?75.341. Context: One of three financial reports tested from a population of 10 financial reports was not submitted by the due date. Cause: Internal controls over financial reporting were not operating effectively to file the FFR in a timely manner. Questioned Costs: Questioned costs were not identified. Repeat Finding: No similar finding was reported in the prior year. Perspective Information: None. Recommendations: The Organization should review its internal controls surrounding financial reporting for each federal award and develop an effective reporting tracking system to allow the Organization to monitor and ensure financial reports are prepared and submitted within the deadline.
Finding 2022-002: Procurement Policy (Material Weakness) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 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. Condition: FCE does not have a formal written procurement policy that conforms to the requirements of the Uniform Guidance. As a result, no procurement files were maintained to document FCE's procurement actions. Questioned Costs: None Cause: FCE has no accounting policies and procedures in place to provide guidance to management on the documentary evidence requirements in accordance with proper internal controls and the Uniform Guidance. Effect or Potential Effect: Without either a procurement policy or procurement documentation, there is a risk that FCE did not perform a proper evaluation of each potential vendor whose costs were charged to federal programs. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards. Included in those policies and procedures should be a procurement policy that conforms to the requirements of the Uniform Guidance. Furthermore, FCE should maintain documentation in its files to provide evidence to support that it followed the procurement policy.
2022-005 Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Facility is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non-Federal entity?s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Facility did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro-purchase threshold. In addition, the vendor was not verified against the central contractor registry prior to transaction inception or on a periodic basis to ensure the vendor was not suspended or debarred. Cause: The Facility did not follow their procurement policies currently in place. Effect: Without obtaining multiple quotes and performing a vendor check for suspension and debarment, demonstrating that the Facility complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: Covered transactions entered into by the Facility over the micro-purchase threshold totaled $73,531. Questioned costs are unable to be identified as multiple quotes were not received by the Facility to ensure the price paid was reasonable. Context: Sampling was not used as only one vendor was utilized by the Facility for flooring purchases. Repeat Finding from Prior Years: No Recommendation: We recommend the Facility review their procurement policies in place, implement internal control processes to ensure compliance with their procurement policies, and retain documentation to support procurement, suspension and debarment procedures performed. Views of Responsible Officials: Management agrees with the finding.
Finding 2022-01: 15.631 Partners for Fish and Wildlife Criteria: 2 CFR 200.318 requires entities to comply with procurement procedures within the section. Condition and Context: For the year ended December 31, 2022, Klamath Watershed Partnership?s procurement policy didn?t align with the requirements described in 2 CFR 200.318 through 2 CFR 200.327. Cause: Klamath Watershed Partnership incidentally thought the procurements for the federal funds were being performed by the oversight agency awarding the funds and their own internal procurement procedures would apply to the other purchase of goods and services. Effect or Potential Effect: The procurement procedures were not performed by Klamath Watershed Partnership. This could have resulted in paying more than ideal or resulted in contracts provided to favored vendors without an opportunity for proposals of other vendors. Questioned Costs: None Context: The procurement policy implemented did not align with the requirement of 2 CFR 200.318. This created a systemic failure to comply with 2 CFR 200.318 for all purchases that would be subject to the procurement policy. Recommendation: Klamath Watershed Partnership should update their procurement policy to align with 2 CFR 200.318 through 2 CFR 200.327. This policy should be implemented immediately after the update is approved. Views of responsible officials and planned corrective actions: Management agrees with the finding and have updated their procurement policy to align with the requirements of 2 CFR 200.318.
2 CFR 200.317 - 200.327 sets procurement standards for non-federal entities other than states. These non-federal entities must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. According to the Authority's Procurement Policy, for small purhcases from $3,501 to $50,000, no less than three offerors shall be solicited to submit price quotations, which may be obtained orally by telephone, or in writing, as allowed by State and local laws. Further, contracts shall not be awarded to debarred, suspended, or ineliglbe contracts. Due to deficiencies in the Authority's internal controls over compliance requireements, eight percent of the procurements tested did not follwo the Authority's policy in regards to procurement as they did not obtain and maintain price quotations for small purchases. The Authority should review the uniform guidance regulations over procurement and consider increasing their thresholds based on uniform guidiance guidelines. Further, the Authority should follow their policy and procedures for procurement.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified 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. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
Finding 2022-003 - Procurement (Compliance) ALN No.: 93.829 - Section 223 Demonstration Programs to Improve Community Mental Health Services Award Year: January 1, 2022 ? December 31, 2022 Federal Agency: United States Department of Health and Human Services Pass Through Entity: Not applicable Criteria: Under 2 CFR Part 200.318(a) of the Uniform Guidance the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards 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 Part 200.317 through 200.327. Condition/Context: South Shore does not have documented procurement procedures in accordance with Uniform guidance standards. Cause: South Shore did not adequately document in form of a written procurement policy, however they were aware of and were following the federal procurement standards under the Uniform Guidance. Effect: South Shore has not complied with the specific requirements for procurement as described in the Uniform Guidance. South Shore is following applicable standards but did not have a formally documented policy. Questioned Costs: None. Recommendation: South Shore should develop a documented procurement policy in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees with the recommendation and plans to develop a formal procurement policy.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): CY 2022, SWIF220329 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $140,378 directly from the U.S. Department of the Treasury (Treasury). During the audit period, the Town expended these funds out of the revenue loss use category. The Treasury has decided that only some of the provisions in the Uniform Guidance apply to the revenue loss use category, as such, the provisions related to procurement, per the Treasury, are not applicable to the revenue loss use category. Therefore, the Town's use of its SLFRF funds received directly from the Treasury are not subject to procurement testing. In addition, the Town received an SLFRF allocation of $800,000 from the Indiana Finance Authority through the State Water Infrastructure or Transportation (SWIF) grant program. These funds are subject to the procurement provisions as outlined in the Uniform Guidance. The suspension and debarment provisions apply to all SLFRF funds regardless of use category or who (Treasury or other entity) awarded the funds. Procurement - Policy (SWIF award) Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements idented in 2 CFR Part 200. The Town did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement - Simplified Acquisition (SWIF award) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Two vendors were identified that fell within the SAT. Both vendors were selected for testing. One of the vendors, paid with SWIF funds, was originally contracted for $84,840, which is below the simplified acquisition threshold. At that time, the Town obtained quotes as would have been required at the small purchase threshold. However, the Town elected to change the scope of the project once SLFRF funds were awarded to cover additional improvements. As the scope of the project changed and the total price increased to over $429,000, more than 20 percent above of the original contract price, the project should have been reviewed and bid out. Since the new total of the project was over the SAT and formal procurement methods were not adhered to, this vendor was not properly procured. Suspension and Debarment (Treasury award) Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements for the money received directly from the Treasury, the Town stated procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transactions. Two covered transactions for goods or services that equaled or exceeded $25,000 paid from the direct SLFRF funds during the audit period were identified. Both transactions were examined to determine whether the Town verified the suspension and debarment status of the vendors prior to payment. The Town had not performed procedures to ensure the two vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance for procurement was isolated to the SLFRF SWIF funding, and the noncompliance for suspension and debarment was isolated to the SLFRF direct funding. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The items is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Indiana Code 5-22-10-9 states: "A purchasing agent may make a special purchase when purchase of the required supplies or services under another purchasing method under this article would seriously impair the functioning of the using agency." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the Town to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and contracts exceeding the simplified acquisition threshold were not properly bid. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that 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 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): CY 2022, SWIF220329 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $140,378 directly from the U.S. Department of the Treasury (Treasury). During the audit period, the Town expended these funds out of the revenue loss use category. The Treasury has decided that only some of the provisions in the Uniform Guidance apply to the revenue loss use category, as such, the provisions related to procurement, per the Treasury, are not applicable to the revenue loss use category. Therefore, the Town's use of its SLFRF funds received directly from the Treasury are not subject to procurement testing. In addition, the Town received an SLFRF allocation of $800,000 from the Indiana Finance Authority through the State Water Infrastructure or Transportation (SWIF) grant program. These funds are subject to the procurement provisions as outlined in the Uniform Guidance. The suspension and debarment provisions apply to all SLFRF funds regardless of use category or who (Treasury or other entity) awarded the funds. Procurement - Policy (SWIF award) Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements idented in 2 CFR Part 200. The Town did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement - Simplified Acquisition (SWIF award) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Two vendors were identified that fell within the SAT. Both vendors were selected for testing. One of the vendors, paid with SWIF funds, was originally contracted for $84,840, which is below the simplified acquisition threshold. At that time, the Town obtained quotes as would have been required at the small purchase threshold. However, the Town elected to change the scope of the project once SLFRF funds were awarded to cover additional improvements. As the scope of the project changed and the total price increased to over $429,000, more than 20 percent above of the original contract price, the project should have been reviewed and bid out. Since the new total of the project was over the SAT and formal procurement methods were not adhered to, this vendor was not properly procured. Suspension and Debarment (Treasury award) Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements for the money received directly from the Treasury, the Town stated procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transactions. Two covered transactions for goods or services that equaled or exceeded $25,000 paid from the direct SLFRF funds during the audit period were identified. Both transactions were examined to determine whether the Town verified the suspension and debarment status of the vendors prior to payment. The Town had not performed procedures to ensure the two vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance for procurement was isolated to the SLFRF SWIF funding, and the noncompliance for suspension and debarment was isolated to the SLFRF direct funding. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The items is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Indiana Code 5-22-10-9 states: "A purchasing agent may make a special purchase when purchase of the required supplies or services under another purchasing method under this article would seriously impair the functioning of the using agency." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the Town to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded and contracts exceeding the simplified acquisition threshold were not properly bid. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that 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 2022-002 Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3-46-0050-57 and AIP3-46-0050-61 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria - 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition - The SF-425 annual report dated September 30, 2022, for award AIP3-46-0050-57 overreported the federal share of expenditures by $1,347, while the SF-425 annual report dated September 30, 2022, for award AIP3-46-0050-61 underreported the federal share of expenditures by $1,494,690. Cause - The Authority does not have an internal control structure designed to ensure amounts reported on SF-425 reports are adequately reviewed and agree to underlying accounting records. Effect - Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs - None reported. Context/Sampling - A nonstatistical sample of 4 reports out of 12 reports. Repeat Finding from Prior Year - No Recommendation - Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF-425 reports agree with the underlying accounting records. Views of Responsible Officials - Management agrees with the finding.
Finding 2022-002 Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3-46-0050-57 and AIP3-46-0050-61 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria - 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition - The SF-425 annual report dated September 30, 2022, for award AIP3-46-0050-57 overreported the federal share of expenditures by $1,347, while the SF-425 annual report dated September 30, 2022, for award AIP3-46-0050-61 underreported the federal share of expenditures by $1,494,690. Cause - The Authority does not have an internal control structure designed to ensure amounts reported on SF-425 reports are adequately reviewed and agree to underlying accounting records. Effect - Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs - None reported. Context/Sampling - A nonstatistical sample of 4 reports out of 12 reports. Repeat Finding from Prior Year - No Recommendation - Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF-425 reports agree with the underlying accounting records. Views of Responsible Officials - Management agrees with the finding.