Finding Text
Program: Continuum of Care Federal Financial Assistance Listing No.: 14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Sacramento Steps Forward Award Year: 2024 Compliance Requirement: Procurement, Suspension and Debarment Grant Award Number: CA0955L9T032209, CA0955L9T032310, CA0143L9T032215, CA0143L9T032316, CA1303L9T032208, CA1303L9T032309 Type of Finding: Significant Deficiency in Internal Controls Over Compliance Criteria: 2 CFR 200.303(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The nonfederal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are met. Condition: The Organization’s documented procurement policy does not incorporate several required elements outlined in 2 CFR §§200.317 through 200.327. Missing elements include, but are not limited to: • Defined procurement methods and thresholds (e.g., micro-purchase, sealed bids), • Procedures to ensure full and open competition, • Requirements for cost or price analysis for purchases above the simplified acquisition threshold, • Affirmative steps to use small and minority businesses and women’s business enterprises, • Procedures for contract administration and oversight, • Inclusion of required contract provisions as listed in Appendix II to 2 CFR Part 200, • Standards of conduct covering conflicts of interest for employees involved in the selection, award, and administration of contracts. Cause: The Organization’s procurement policy has not been updated to reflect the detailed procurement standards required under the Uniform Guidance. Effect: An incomplete procurement policy may lead to inconsistent practices and increase the risk of noncompliance with federal procurement requirements, potentially affecting the allowability and documentation of costs charged to federal awards. Questioned Costs: No questioned costs were identified as a result of our procedures. Context: This finding was identified during testing of the Organization’s procurement policy under the Continuum of Care Program. Repeat Finding from Prior Year: Partial repeat of Finding 2023-003. The prior finding included both procurement policy deficiencies and lack of suspension and debarment documentation. The current year finding relates only to the procurement policy. Recommendation: We recommend that management revise the Organization’s procurement policy to incorporate all required elements outlined in 2 CFR §§200.317 through 200.327, including definitions of procurement methods, competitive requirements, cost/price analysis, contract provisions, and oversight responsibilities. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.