Finding 1151318 (2021-010)

Criteria: According to 2 CFR Part 200.317, the City must adhere to its established policies and procedures for both federal and non-federal funds. The City’s procurement policies require that purchase orders must properly authorized and documented. Additionally, the City is required to use competitive procurement methods, including an informal bidding process for purchases under specified thresholds, to ensure fairness and transparency. Condition: The audit revealed that several purchase orders related to ARPA-funded expenditures were processed without the necessary approvals, and the informal bidding process was not followed for purchases. Cause of Condition: The City’s procurement policies and procedures were not adequately followed, possibly due to insufficient enforcement of internal controls related to procurement processes for ARPA funds. Effect: The lack of proper authorization and competitive bidding could lead to unauthorized transactions, higher costs, and potential conflicts of interest. This undermines the control over ARPA-funded expenditures and increases the risk of non-compliance with federal regulations. Recommendation: Enforce procurement procedures to ensure all purchase orders for ARPA funded projects are signed and approved by authorized personnel. Additionally, implement and adhere to an informal bidding process for applicable procurements to ensure compliance with competitive procurement requirements. Questioned Cost: $ 76,914.75 Views of Responsible Official: The City acknowledges and agrees with the finding regarding procurement deficiencies during the administration of ARPA funds. Since the time period covered by the audit, the City has taken significant steps to strengthen internal controls over procurement. A full-time Purchasing Manager has been appointed to oversee and enforce compliance with both City and federal procurement standards. In addition, the City is currently updating its procurement policy to ensure clearer thresholds, detailed procedures for informal bidding, and approval workflows aligned with 2 CFR Part 200. All procurement staff are being trained on the revised procedures and control mechanisms. These updates are being documented, and we have introduced internal review checkpoints prior to purchase order execution. We are also developing a procurement checklist and digital authorization process to ensure documentation is complete before funds are obligated. This will prevent similar deficiencies from recurring.