Finding Text
Finding 2023 – 004: Procurement and Suspension and Debarment (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2021-004 and 2022-004) Material Weakness – 93.U01 Title V Criteria: Per Uniform Guidance 2 CFR § 200.302 and 2 CFR § 200.333, entities must maintain records that adequately identify the source and application of federal funds and retain documentation to support compliance with program requirements. Additionally, per 2 CFR § 200.213, entities must verify that vendors and contractors receiving federal funds are not suspended or debarred by checking the System for Award Management (SAM) or obtaining vendor certifications. Condition: The Organization was unable to provide sufficient documentation to support compliance with federal procurement and suspension and debarment requirements for purchases made under the Title V program. The general ledger did not allow for sufficient identification of transactions related to the Title V program as all expenditures were recorded through journal entries without supporting transaction-level detail. Due to this limitation, we were unable to select procurement transactions for testing or verify whether vendors had been screened for suspension and debarment before contracts were awarded. Questioned Costs: Unable to determine due to scope limitation. Cause: The Organization did not maintain adequate financial records or procurement documentation to demonstrate compliance with Uniform Guidance requirements. The lack of a complete and detailed general ledger further limited the ability to track and substantiate transactions. Effect: Without sufficient documentation, the Organization was unable to demonstrate compliance with federal procurement regulations, increasing the risk of noncompliance and potential disallowed costs. Additionally, these expenditures may be subject to repayment or further review by the granting agency. Recommendation: We recommend the Organization strengthen its financial recordkeeping and procurement processes by implementing procedures to ensure a complete and accurate general ledger is maintained. This should include appropriate coding to identify federal program expenditures. The Organization should also establish and enforce procurement policies that align with Uniform Guidance, including documentation of procurement methods, price or cost analyses, and vendor selection, implementing a process to verify and document vendor suspension and debarment status before awarding federally funded contracts, and conducting periodic internal reviews to ensure compliance with procurement and recordkeeping requirements. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.