Finding Text
Finding #2022-002
Significant Deficiency – Lack of Internal Control Over Compliance with Procurement Policy
Assistance Listing Number #14.231
Condition:
In order to test internal control over compliance and compliance related to procurement, we selected a representative sample of disbursements from all major program contracts. Of the 103 disbursements selected, supporting documentation for 12 items expended under 3 contracts did not contain records sufficient to detail the history and rationale for the method of procurement and the reason the required bid process was bypassed, as allowed by the procurement policy. In discussions with program staff and management, we concluded the Organization’s procurement policies were ultimately followed and no major program noncompliance or questioned costs were identified.
In order to evaluate the scope of the identified deficiency in internal control over compliance with procurement requirements, we determined it necessary to expand our test organization-wide to include non-federal expenditures, noting no other issues.
Criteria:
Uniform Guidance requires all agencies develop a procurement policy ensuring compliance with Section 200.318 through 200.326. The Organization has established a procurement policy which requires sealed bids for contracts or procurements in excess of $250,000 and requires the maintenance of records sufficient to detail the history and rationale for the method of procurement, including in circumstances where the required bid process is bypassed for an allowable reason, as defined in the procurement policy. Management and those charged with governance are responsible for the design, implementation, and maintenance of internal control relevant to compliance with the established procurement policy.
Cause:
As discussed in finding #2022-001, the Organization continued to experience significant growth in activities and personnel, as well as turnover in key management and finance positions, which did not allow for consistent implementation of existing internal control over compliance with the established procurement policy.
Effect:
Although management was able to provide reasonable explanation for bypassing the required bid process in compliance with the procurement policy, records detailing the bypass were not included in the Organization’s files and represents a significant deficiency in internal control over compliance.
Recommendation:
Management should communicate and provide training to the program and finance departments on the Organization’s procurement policy and the requirements of Uniform Guidance. Further, management should re-evaluate internal control over compliance to ensure proper review and approval of all procurements, including whether appropriate records justifying the bypass of the sealed bid process and the conclusion on allowable vendor selections are being maintained.
Views of Responsible Officials and Planned Corrective Actions:
Management concurs and has provided a Corrective Action Plan