Finding 1148608 (2023-001)

Federal Program Information Funding Agency: U.S. Department of Treasury Federal ALN: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Pass Through Agency: Tennessee Arts Commission Criteria As required by the Uniform Guidance, procurement standards require non-federal entities to follow documented procurement procedures that are in compliance with the procurement standards in the federal guidelines. Condition During the period under audit, FAM had a procurement policy in place, but it did not comply with the procurement standards in the federal guidelines. Cause FAM did not develop a procurement policy that included compliance with the micropurchase threshold requirements and therefore did not have a procurement policy in place that met the requirements of the Uniform Guidance. Effect Purchases may occur that do not meet the procurement standards. Context For the year ending December 31, 2023, all of the expenditures charged to the grant were over the $10,000 micropurchase threshold. While certain agreements in effect during the year could be subject to the procurement requirements, most were in effect prior to the start of the grant period or are for services such as utilities or professional services not subject to the procurement requirements. No new agreements were entered into during the year ending December 31, 2023, that were charged against the grant. Identification of a Repeat Finding This is a repeat finding from the immediate previous audit, 2022-002, which has been partially corrected. Auditor’s Recommendation FAM should ensure that the procurement policy subsequently implemented meets the procurement standards outlined in the Uniform Guidance, and should be followed for all purchases meeting the established thresholds. Views of Responsible Officials and Planned Corrective Actions Management agrees with the auditor’s recommendation. In FY 2022, FAM encountered difficulties complying with this criterion because the grant was not awarded and under contract until over nine months after the grant period began. Long-standing vendor relationships were already in place and so costs were incurred prior to award knowledge. In FY 2023, FAM had already incurred costs before the FY 2022 Uniform Guidance audit brought to our attention that our procurement policy did not comply with federal guidelines. FAM has developed a procurement policy that meets the procurement standards outlined in the Uniform Guidance including established thresholds.