Finding Text
Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Federal Agency: Department of Health and Human Services Federal Program: Certified Community Behavioral Health Clinic, ALN No. 93.696, Award Period 9/30/2023 – 9/29/2027 Compliance Requirement: Procurement, Suspension and Debarment Repeat Finding: No Condition: KANZA’s procurement policy that adhered to the Uniform Guidance was not implemented until June 2024. This was after procurement decisions were made that were funded by this grant. During our testing of five covered transactions (all vendors), we noted that management was not able to provide supporting documentation that suspension and debarment procedures were performed before the start of the procurement activity. Questioned Costs: None Context: For five of the five vendors tested for suspension and debarment, management was not able to provide the required supporting documentation. KANZA confirmed that the SAM check had been done but the documentation was not maintained at the time of the check. Criteria: Per 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements (Uniform Guidance), Section 200.318 General Procurement Standards, the non-Federal entity must maintain records sufficient to detail the history of procurement and this procurement activity must be supported with a procurement policy. Also, 2 CFR 180.300 prohibits entities from contracting under covered transactions to parties that are suspended or debarred from doing business with the federal government. A contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. In order to comply with federal suspension and debarment requirements, KANZA can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. Cause: The grant was new to KANZA in fiscal year 2024 and requirements were not communicated to KANZA by the grantor. Effect: The finding indicates that there could be some process improvements in how contracts are reviewed, documented and maintained to provide evidence the compliance requirements are being met. Recommendation: We understand that the procurement policy is now implemented. We recommend that KANZA either obtain certifications from vendors stating their organization is not suspended, debarred, or otherwise excluded from participation in federal assistance programs or document the procedures performed to verify the vendor is not identified as suspended or debarred on the SAM website. We recommend that KANZA has proper procedures in place to ensure that all contractual documentation is maintained and able to be located. Management’s Response/Corrective Action Plan (Unaudited): At this time, the administrator(s)/staff member(s) tasked with executing the grant requirements at KANZA will more effectively document standard purchasing procedures and the additional requirements applicable to procurements that are subject to the federal Uniform Guidance regulations concerning the use of federal funds. Planned Completion Date: The procedures will be implemented on or before January 1, 2025. Contact Person Responsible for Correction Action: Shelby Donahoo, Director of Finance