Finding Text
FINDING 2023-002
Information on the federal program:
Subject: Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and
Debarment
Federal Agency: U.S. Department of Treasury
Assistance Listing Number: 21.027
Federal Award Number: CY 2021
Pass-Through Entity: Direct Grant
Compliance Requirements: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards 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). . . ."
2 CFR section 200.303 states in part: "The non-Federal entity must use one of the following methods of
procurement…
(b) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an appropriate
simplified acquisition threshold based on internal controls, an evaluation of risk and its documented
procurement procedures which must not exceed the threshold established in the FAR. When applicable, a
lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited
under State, local, or tribal laws or regulations.
Condition: An effective internal control system was not in place at the City to ensure compliance with
requirements related to the grant agreement and the respective procurement method of the Procurement
and Suspension and Debarment compliance requirement.
Cause: Management had not established a system of internal control that would have ensured proper
procurement procedures are followed.
Effect: The failure to establish an effective internal control system enabled noncompliance with the grant
agreement and the simplified acquisition procurement method of the Procurement and Suspension and
Debarment compliance requirement.
Questioned Costs: There were no questioned costs identified.
Context: Two procurements were selected for testing in the current year. For the small purchase
transaction, management only provided the contract. No other procurement support showing evidence of
bids was provided. Additionally, support showing that the City had performed a suspension and debarment
check was not provided. For the simplified acquisition transaction, management performed procurement
for similar services in 2016. The vendor selected in 2016 was used for the transaction charged to the federal
grant without obtaining additional bids.
Identification as a repeat finding, if applicable: No
Recommendation: We recommended that the City’s management establish controls related to the grant
agreement and the simplified acquisition purchase procurement method of the Procurement and
Suspension and Debarment compliance requirement. Management should ensure that the City’s
procurement policy as well as federal guidelines are followed, which includes ensuring the appropriate
procurement type is determined and the corresponding requirements are followed. The procurement
process and determination should be documented and the appropriate records maintained. We recommend
that as part of the procurement process, management perform suspension and debarment checks before
entering into contracts with vendors that meet the required threshold. The suspension and debarment
checks should be documented and appropriate support maintained.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.