Finding Text
Criteria or Specific Requirement – 2CFR Section 200.318(i) requires an Organization to maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type, contractor selection or rejection, and the basis for the contract price. Conditions – During 2024, the Organization did not maintain documentation related to how they chose a contractor for construction projects such as how they chose contractors to get bids from, how many bids were obtained, detailed bid information, and what factors they considered in choosing a contractor. No documentation exists showing considerations of price, contingencies, length of contract, and perceived risks. Context – The Organization exceeded the single audit threshold for the first time in 2024, primarily due to a one-time coronavirus grant. Cause – Management was not aware of the requirement to maintain procurement documentation. Effect or Potential Effect – The absence of procurement documentation increases the risk of non-compliance with federal regulations and limits the ability to demonstrate that federal regulations were followed. Recommendation – We recommend maintaining documentation supporting the compliance with federal regulations for all expenditures of federal funds. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the finding and appreciates the auditor’s recommendation. The Organization exceeded the Single Audit threshold for the first time in 2024 due to a one-time coronavirus-related grant. As a result, management was not fully aware of the federal procurement documentation requirements applicable to these funds. To address this matter, management has implemented procedures to ensure that procurement documentation supporting compliance with federal regulations is maintained for all federal expenditures. These procedures include staff training on federal grant compliance requirements, enhanced oversight of procurement activities, and the use of standardized documentation and retention practices. Management believes these corrective actions will mitigate the risk of future noncompliance and strengthen overall federal grant administration.