Finding Text
Finding 2023-002 – Inadequate Design of Monitoring Controls over Procurement Policies, Assistance
Listing 93.224 Health Center Program, Affordable Care Act Grants for New and Expanded Services
Under the Health Center Program and Assistance Listing 93.526 Affordable Care Act (ACA) Grants for
Capital Development in Health Centers, Continuation of Finding 2022-003
Criteria: 2 CFR 200.320 requires the non-Federal entity to have and use documented procurement procedures
that are consistent with the standards of that section. Additionally, Management is responsible for the design,
implementation, and maintenance of effective internal controls over compliance with requirements of laws,
statutes, regulations, rules and provisions of contracts or grant agreements to prevent, or detect and correct noncompliance
on a timely basis.
When small purchase procedures are used, 2 CFR 200.320(a)(2) requires price or rate quotations to be obtained
from an adequate number of qualified sources. For acquisitions exceeding the simplified acquisition threshold,
the non-federal entity must use one of the methods prescribed by 2 CFR 200.320(b) or (c): the sealed bid
method; the competitive proposals method; 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)).
Condition: For three vendors tested during the prior year audit, procurement documentation was not prepared
and/or retained to support compliance with the regulations above and the Center’s procurement policy. During
2023, the same three vendors continued to receive funding under these established contracts. No new vendors
required procurement procedures.
Context and Cause of Condition: Although the Center has established policies and procedures in place over the
procurement process, there was a lack of documentation to support that the procurement process had been
completed as required. In addition, it is not practical to follow the procurement process for existing vendors
with contracts that were already in place from previous years.
Potential Effect: Failure to perform and/or retain documentation of the procurement process resulted in
noncompliance with the procurement requirement.
Questioned Costs: None
Recommendation: Recommend to consistently follow the existing procurement policy and to maintain
documentation through the recommended terms outlined in the award.
Views of Responsible Officials: Although Hamakua Health staff were not able to provide all the procurement
records required by the auditors in the short period of time that was given, these procurement documents should
have been scanned by those who initiated and completed the procurement processes and kept them in a
ShareFile for easier access, especially for those contracts that are still active. This is now the new standard
practice for all new procurement processes.
See Management’s Response and Corrective Action Plans on page 33.