Finding 1081159 (2023-003)

Federal Program Information Federal Agencies: Department of Health and Human Services (“HHS”) Pass-Through Entity: Virginia Department of Health Pass-Through Entity Number: Not Applicable Awards: Assistance Listing Number 93.918 – Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease (Part C) Award Periods: May 1, 2022 to April 30, 2023; May 1, 2023 to April 30, 2024 Description: Documentation of Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “The Non-Federal entity must: (a) 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 be in compliance 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).” Part 200.320 Methods of procurement to be followed states the following: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319” regarding the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Condition As part of our testing over the operating effectiveness of internal controls over the Procurement, Suspension and Debarment assertion, we noted that the System had a procurement policy that included procedures for small purchases (i.e. purchases between $50,000-$250,000) in which management obtains one or more sources from suppliers or public websites in order to document justification for vendor approval. However, records were not maintained to document the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Management also validates that vendors are reviewed on a monthly basis to ensure they are not included on the suspension and debarment list. There was no documentation to support completeness and accuracy of the vendor list for suspension and debarment. Cause The System did not retain documentation to support compliance with the procurement policy that conforms to the provisions required by the Uniform Guidance. The System did not retain documentation to support the completeness and accuracy of the vendor list for suspension and debarment. Effect or potential effect Purchasing of goods and/or servicing with the grant funds may not be in compliance with the Uniform Guidance. The vendor list for suspension and debarment may not be complete and accurate and therefore, federal funds may be used to pay a contractor that is suspended or debarred. Questioned costs None. Identification of a repeat finding This is not a repeat finding. Context Small purchases were $106,345, which represents approximately 3% of total federal expenditures of $3,589,730 reported on the Schedule for the year ended December 31, 2023. Management subsequently documented the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. As part of our testing for suspension and debarment, we did not identify any vendors that were excluded from the suspension and debarment list that were part of the grant. Recommendation The System should update its process to ensure documentation is retained consistent with the procurement policy and suspension and debarment for purchasing goods and/or services with federal funds. View of responsible officials Management concurs with the finding and will implement procedures to documentation is retained to support procurement and suspension and debarment.