Finding Text
Finding Number: 2023-004
Prior Year Finding: 2022-004
Federal Agency: U.S. Department of Treasury
Federal Program: COVID 19 – Coronavirus State and Local Fiscal Relief Fund
Assistance Listing: 21.027
Pass-Through Entity: Maryland Department of Housing and Community Development
Pass-Through Award Number and Period: (7/1/2022 – 6/30/2023)
Compliance Requirement: Procurement
Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance
Criteria or Specific Requirement:
Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: 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 comply 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).
Compliance: Per 2 CFR section 200.318, a 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.
Per 2 CFR section 200.319, all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320.
Per the Town’s purchasing policy, goods or services costing $10,000 or more must be purchased from the lowest responsive bidder meeting specifications after advertising for bids.
Condition/Context: The Town failed to provide documentation supporting compliance with required procurement processes for goods or services exceeding $10,000 for four out of six vendors tested. This includes a lack of evidence on how these vendors were selected and whether the procurement process ensured full and open competition. Additionally, two vendors utilized by the police department did not undergo the general bidding process.
Questioned Costs: Unknown.
Cause: The Town’s internal controls were not sufficient to ensure that procurement policies were followed for purchases made for the program.
Effect: Failure to adhere to procurement policies and procedures may result in obtaining goods or services under terms that are not in the best interest of the federal program.
Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-04.
Recommendation: The Town should review and enhance controls and procedures to ensure that it follows procurement policy for all goods and services charged to the program and should ensure that all departments are subject to applicable controls, policies and procedures.
Views of Responsible Officials: Management agrees with the finding.