Finding 1073428 (2023-001)

Finding 2023-001 Procurement Information on the Federal Programs: 93.103 Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General procurement standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws, and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted instances where procurement procedures were not documented for purchases in accordance with the Organization's threshold. Cause: The Organization did not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year. Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to, and thus, there lies the potential that the Organization will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of Federal Expenditures based on lack of fair competition. Questioned Costs: None noted. Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures, as well as substantive testwork over transactions above a defined threshold from select expense accounts that were charged to the Federal program. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. The issue is considered systemic in nature. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that the Organization ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files.