Finding Text
Skamania County
January 1, 2022 through December 31, 2023
2023-001 The County did not have adequate controls for ensuring compliance with federal procurement requirements.
Assistance Listing Number and Title: 20.205, Highway Planning and Construction
Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington State Department of Transportation
Pass-through Award/Contract Number: STRP-30MR-(001) / STPR-HIPR-2030-(007) / BHOS-2030(008) / STBGR-30A3(001) / STBGR-2030(009) / HISP-000S(639)
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
During fiscal year 2023, the County spent $1,037,422 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
Federal regulations also require recipients to establish and follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity.
Our audit found the County’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the County did not establish its own written procurement procedures, as federal regulations require.
We consider this deficiency in internal controls to be a significant deficiency.
Cause of Condition
Management and staff were unaware the County was required to have and use its own written procurement procedures.
Effect of Condition
Although the County did not establish its own written policy and procedures before procuring with program funds, it did comply with federal requirements for soliciting and awarding engineering and public works contracts. However, without these written policies and procedures, the County is at greater risk of noncompliance with the most restrictive of federal, state or local procurement methods and requirements when using federal funds to procure contractors.
Recommendation
We recommend the County establish written procurement procedures that conform to federal procurement requirements.
County’s Response
The County has already begun putting together an informal bidding policy and procedure document that will include a federal procurement section.
Once the policy is in place, it will be distributed to all departments for their use.
Auditor’s Remarks
We thank the County for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the County’s corrective action during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Section 318, General procurement standards, establishes requirements for written procedures.