FAC Explorer

Finding 1140269 (2024-002)

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Requirement
I
Questioned Costs
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Year
2024
Accepted
2025-06-04
Audit: 358049
Organization: The University of Alabama in Huntsville (AL)
Auditor: Pricewaterhousecoopers LLP

AI Summary

  • Core Issue: The University raised its micro-purchase threshold to $75,000 but failed to revert it to $10,000 after losing its low-risk auditee status due to a material weakness in internal controls.
  • Impacted Requirements: Purchases between $10,000 and $74,999 lacked proper documentation, violating procurement guidelines under 2 CFR 200.320.
  • Recommended Follow-Up: Implement a control for timely communication between financial reporting and procurement teams to ensure compliance with audit findings and adjust procurement policies as needed.

Finding Text

Procurement Cluster: Research and Development (R&D) Federal Agency: Various Assistance Listing Title and Number: Various Award Name: Various Award Identifying Number: Various Award Year: Fiscal year 2024 Pass-Through Entity: Various Criteria 2 CFR 200.320(a) establishes informal procurement methods, including micro-purchases in 2 CFR 200.320 (a)(1), for small purchases in order to expedite the completion of transaction, minimize administrative burdens, and reduce costs. 2 CFR 200.320(a)(1)(v) allows recipients to increase the micropurchase thresholds to higher than $50,000 with approval of the entity’s cognizant agency for indirect costs. The request must include a self-certification of the following requirements from 2 CFR 200.320 (a)(1)(iv): (A) Qualification as a low-risk auditee, in accordance with the criteria in § 200.520 for the most recent audit; (B) Annual internal institutional risk assessment to identify, mitigate, and manage financials risks; and, (C) For public institutions, a higher threshold is consistent with State law. The increased threshold is valid until any factor that was relied on in the establishment and rationale of the threshold changes. Condition In October 2022, the University received approval from the U.S. Department of Health and Human Services (DHHS) to raise its micro-purchase threshold to $75,000 having self-certified that it met the criteria of 2 CFR 200.320 (a)(1)(iv). In January 2024, in connection with the issuance of the September 30, 2023 financial statements, UAH reported a material weakness in internal control over financial reporting. This resulted in the University no longer being a low-risk auditee for the September 30, 2024 Uniform Guidance audit and thus no longer meeting the criteria that was relied upon by DHHS when providing the approval to raise the University’s micro-purchase threshold to $75,000. As a result, the increased threshold was no longer valid, and the University did not lower its micro-purchase threshold to $10,000 in January 2024 when the material weakness was identified. The University of Alabama in Huntsville Schedule of Findings and Questioned Costs Year Ended September 30, 2024 17 Cause Management’s process did not allow for communication of the change in auditee status to the parties impacted by the change. Effect Certain purchases made under Federal grants and contracts between $10,000 and $74,999 from February 1, 2024 through September 30, 2024 lacked sufficient documentation to support the justification and rationale for the selection of the specific vendor (e.g., there was no sole source form or other documentation where only one vendor was used). Questioned Costs None. Recommendation We recommend that the University design and implement a control whereby the financial reporting department communicates the results of the annual financial statement audit to those responsible for the Uniform Guidance compliance audit, including Procurement Services, as soon as the financial statement audit is complete, so that the auditee status can be evaluated and any changes to Procurement Services policies and procedures can be made and applied in a timely manner. Management’s View and Corrective Action Plan Management’s response is reported in “Management’s View and Corrective Action Plan” on the following page.

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $23.44M
84.063 Federal Pell Grant Program $9.27M
12.600 Community Investment $1.23M
20.109 Air Transportation Centers of Excellence $1.05M
12.U01 Department of Defense $1.05M
12.905 Cybersecurity Core Curriculum $716,486
93.264 Nurse Faculty Loan Program (nflp) - Outstanding $550,524
84.365 English Language Acquisition State Grants $520,954
93.846 Arthritis, Musculoskeletal and Skin Diseases Research $519,700
12.431 Basic Scientific Research $449,745
11.015 Broad Agency Announcement $402,293
84.425 Education Stabilization Fund $312,666
12.617 Economic Adjustment Assistance for State Governments $272,779
84.007 Federal Supplemental Educational Opportunity Grants $257,063
84.033 Federal Work-Study Program $254,313
84.325 Special Education - Personnel Development to Improve Services and Results for Children with Disabilities $254,049
11.611 Manufacturing Extension Partnership $230,592
93.855 Allergy and Infectious Diseases Research $190,019
10.904 Watershed Protection and Flood Prevention $187,803
11.609 Measurement and Engineering Research and Standards $147,267
12.300 Basic and Applied Scientific Research $139,197
93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders $121,361
81.049 Office of Science Financial Assistance Program $121,006
43.002 Aeronautics $112,766
12.330 Science, Technology, Engineering & Mathematics (stem) Education, Outreach and Workforce Program $107,579
93.264 Nurse Faculty Loan Program (nflp) - New Loan Issues Fy 24 $100,304
47.074 Biological Sciences $99,081
12.903 Gencyber Grants Program $97,989
11.459 Weather and Air Quality Research $97,119
19.040 Public Diplomacy Programs $86,144
12.902 Information Security Grants $71,554
81.057 University Coal Research $70,321
12.002 Procurement Technical Assistance for Business Firms $66,939
12.RD Department of Defense $61,936
66.516 P3 Award: National Student Design Competition for Sustainability $52,359
47.083 Integrative Activities $51,010
12.U03 Department of Defense $49,396
21.015 Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States $48,057
11.RD Department of Commerce $45,732
20.509 Formula Grants for Rural Areas and Tribal Transit Program $43,617
93.307 Minority Health and Health Disparities Research $39,449
47.076 Stem Education (formerly Education and Human Resources) $36,002
16.560 National Institute of Justice Research, Evaluation, and Development Project Grants $30,860
12.800 Air Force Defense Research Sciences Program $29,996
84.411 Education Innovation and Research (formerly Investing in Innovation (i3) Fund) $29,043
10.558 Child and Adult Care Food Program $27,399
11.432 National Oceanic and Atmospheric Administration (noaa) Cooperative Institutes $26,710
47.084 Nsf Technology, Innovation, and Partnerships $26,614
47.075 Social, Behavioral, and Economic Sciences $26,133
43.003 Exploration $22,233
10.699 Partnership Agreements $20,879
43.008 Office of Stem Engagement (ostem) $20,476
15.820 National and Regional Climate Adaptation Science Centers $19,564
43.001 Science $17,458
19.009 Academic Exchange Programs - Undergraduate Programs $11,762
43.009 Mission Support $10,994
47.070 Computer and Information Science and Engineering $10,331
43.007 Space Operations $10,098
10.707 Research Joint Venture and Cost Reimbursable Agreements $8,956
43.012 Space Technology $8,538
47.041 Engineering $7,095
12.U02 Department of Defense $6,245
16.RD Department of Justice $4,860
43.RD NASA $4,172
23.RD Department of Transport $3,469
12.630 Basic, Applied, and Advanced Research in Science and Engineering $3,186
84.379 Teacher Education Assistance for College and Higher Education Grants (teach Grants) $2,357
47.049 Mathematical and Physical Sciences $1,342
15.945 Cooperative Research and Training Programs – Resources of the National Park System $376
93.847 Diabetes, Digestive, and Kidney Diseases Extramural Research $86
15.615 Cooperative Endangered Species Conservation Fund $26
93.865 Child Health and Human Development Extramural Research $-50
47.050 Geosciences $-2,113