Finding 1149456 (2023-003)

Finding 2023-003 – COVID 19 – Coronavirus State and Local Fiscal Recovery Fund - AL No. 21.027 U.S. Department of Treasury Noncompliance and Material Weakness Related to Internal Control over Compliance of the Major Program Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. As governmental subrecipients of states they are also required to use the same state procurement policies and procedures for federal funds as for non‐federal funds, the Town is required to follow Massachusetts General Laws, Chapter (MGL) 30(b). MGL 30(b) requires the solicitation of three written or oral quotes for procurements of supplies between $10,000 and $49,999 and sealed bids or proposals for procurements of supplies $50,000 and over. Management of the Town is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. Condition: During fiscal year 2023, the Town could not provide evidence that they complied with the required procurement policies and procedures in place as it related to two of the expenses charged to the major program. Context: The Town purchased a new boiler for the School however the procurement documentation could not be located and the employee who would have overseen the project was unavailable to provide the supporting documentation. In addition, the Town could not locate or provide evidence that procurement procedures were followed when selecting an engineer for the Water Tank project. Questioned Costs: $71,500 related to the School Boiler Project and $170,163.70 related to the Water Tank Project. Cause: Directors used the Massachusetts procurement guidelines and not federal guidelines. Effect or Potential Effect: There is a risk that the amount charged to the federal awards major program may not be in accordance with procurement, suspension, and debarment principles. Identification as a Repeat Finding: N/A Recommendation: The Town of Hopedale should address the noncompliance and material weakness in internal controls noted above in order to ensure that procurements are conducted in accordance with federal and state requirements. Management Response: New procedures in place for documentation and reporting.