Finding Text
Finding 2024-002
Procurement Policy
During our review of the Organization’s procurement policy, we noted that while a general framework exists, the policy does not currently address several key elements required under 2 CFR Part 200 - Uniform Guidance. Specifically, the procurement policy omits critical components related to vendor acceptance, debarment verification, domestic procurement preference, and the detailed processes required for the Simplified Acquisition Threshold.
The absence of these elements increases the risk of noncompliance with Federal procurement standards, vendor selection errors, and insufficient documentation in the event of Federal oversight or audit.
Federal Agency: Multiple (Various pass-through and direct Federal awards)
AL #: Various.
Compliance requirement: Audit requirement 2 CFR Part 200
Type of Finding: Noncompliance and significant deficiency in internal control over compliance.
Repeat Finding: No.
Criteria: According to Uniform Guidance, non-federal entities must establish and follow procurement policies that:
Include procedures to verify vendor eligibility through SAM.gov per 2 CFR §200.214.
Clearly define procurement methods and thresholds, including the Simplified Acquisition Threshold.
Incorporate a domestic preference for procurements per 2 CFR §200.322.
Maintain documented procedures for handling procurement disputes, protests, and source evaluations.
Cause: The Organization’s procurement policy has not been formally updated to fully incorporate the current Federal requirements as outlined in Uniform Guidance.
Effect: Without a fully compliant procurement policy, the Organization is at increased risk of noncompliance with Federal procurement standards, inadvertently contracting with ineligible or debarred vendors and inadequate documentation to support decisions.
Questioned Costs: No questioned costs identified.
Recommendation: We recommend that management amend and formally update the procurement policy to address the following critical areas: Vendor acceptance and debarment testing, definition and procedures for the Simplified Acquisition Threshold, domestic preference for procurements, procedures for handling procurement issues, and policy governance and version control.
Management Response: We appreciate AAFCPAs’ review and agree that our procurement policy requires updates to better align with current federal requirements and internal best practices.
To improve clarity, accountability, and regulatory compliance, the Finance Department will work with the Fiscal Sponsorship Department to develop the Organization’s procurement policy going forward. We will ensure the updated policy includes the following:
We will formalize procedures to confirm vendor eligibility, including consistent use of the SAM.gov exclusions list prior to entering contracts, and ensure documentation is retained for audit purposes.
The updated policy will outline specific steps for procurement activities at various thresholds, particularly mid-range purchases, with requirements for obtaining multiple quotes and documenting price comparisons.
In alignment with Federal guidelines, the revised policy will include a provision supporting preference for U.S.-made products and materials when feasible.
New sections will be added to address how the Organization will manage vendor selection reviews, disputes, and issue resolution to promote fairness and consistency in the procurement process.
To ensure transparency and version control, the policy will include the date of each revision and a process for periodic review.
The Fiscal Sponsorship Department will implement the updated policy, coordinate training for programmatic staff, and monitor compliance with the updated procedures. We expect the revised procurement policy to be finalized and implemented by July 31, 2025.