Finding Text
2023-007 Improve Controls and Compliance with Procurement Federal Program Information Federal Agency: U.S. Department of Treasury Award Name(s): COVID-19 Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number(s): 21.027 Award Year: 2023 SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Compliance Requirement: Procurement and Suspension and Debarment Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Per Uniform Guidance (2 CFR § 200.318–200.327), recipients of American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds must follow documented procurement procedures and maintain evidence of compliance with applicable requirements, including obtaining fully executed contracts for purchases made with federal funds. Condition and Context As part of testing of two procurement transactions totaling $451,059 in the ARPA program, support was unable to be provided for both selections. There was no evidence of compliance with procurement policies, and no executed contracts were maintained to support the expenditures. Cause The City did not implement effective controls to ensure that all procurement transactions were conducted following requirements in place under the Uniform Guidance, supported by documentation, and executed contracts were in place. Effect or Potential Effect Lack of documentation and executed contracts for federally funded procurements exposes the City to increased risk of unallowable costs, noncompliance, and questioned costs. Questioned Costs Known questioned costs under the program totaling $451,059 were identified. Identification as a Repeat Finding This was not a finding in the prior year. Recommendation The City should strengthen its internal controls over procurement by implementing procedures to ensure that all federally funded purchases are fully documented, including compliance with procurement policies and maintenance of executed contracts. All such documentation should be retained and readily available. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.