Finding Text
2023-002 Compliance and Internal Controls over Procurement (Material Weakness and Material Noncompliance) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: While the Organization has approved policies and procedures for procurement, these are not consistently followed and therefore no observable evidence was available to verify that proper procurement procedures were followed for 4 out of 8 selected products and services for our testing. Cause: Majority of the purchases subject to potential procurement were from recurring vendors from prior years for whom documentation was not available at the Organization. For any new vendors, the policies were not applied consistently by the upper management. Effect: Not following procurement policies may result in funds to be returned back to grantor and / or impact future funding. Questioned Costs: Known costs of $169,575 and likely costs of $198,266. Perspective: As a result of not having a devoted, full-time employee in the senior financial management position, required controls and record keeping were not properly established. Repeat Finding: Yes Recommendation: The Organization should establish procedures to ensure that controls related to procurement are consistently implemented and that all written records are maintained to support that the compliance requirement is met. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.