Finding 1176969 (2023-003)

Material Weakness Repeat Finding
Requirement
I
Questioned Costs
-
Year
2023
Accepted
2026-03-09
Audit: 390799
Organization: Papa Ola Lokahi (HI)
Auditor: KKDLY LLC

AI Summary

  • Core Issue: The Organization failed to follow required procurement methods for subawards, lacking competitive selection processes and necessary documentation.
  • Impacted Requirements: Noncompliance with Uniform Guidance 2 CFR §200.320, which outlines formal procurement methods and conditions for noncompetitive procurement.
  • Recommended Follow-Up: Update policies and procedures to align with Uniform Guidance standards, ensuring proper documentation and compliance with procurement requirements.

Finding Text

Material Weakness Finding No. 2023-003: Procurement Policies U.S. Department of Education Native Hawaiian Education Act Program Federal Assistance Listing Number 84.362A. U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria The Uniform Guidance 2 CFR §200.320 sets forth the methods of procurement to be followed in the acquisition of property or services required under a Federal award or subaward, which includes formal purchase methods such as proposal or bids when the value of the property or services under a Federal financial assistance award exceeds a certain threshold, as defined. Furthermore, 2 CFR §200.320(c) provides specific circumstances in which noncompetitive procurement can be used. Condition During our audit, we noted that the Organization made subawards to entities which were subject to a formal purchase method, for which competitive processes for selection were not performed, nor was documentation of the specific criteria of 2 CFR §200.320(c) met to support noncompetitive procurements maintained. Cause Management had not updated its policies and procedures to incorporate certain pertinent sections of the procurement standards of the Uniform Guidance. Effect The lack of procurement standards in accordance with the Uniform Guidance may result in allowable cost issues. Identification of a Repeat Finding This finding was reported as a federal award finding in the immediately previous audit as Finding No. 2022-003. Recommendation We recommend that the Organization incorporate the procurement standards of the Uniform Guidance to its policies and procedures manual to ensure compliance with Federal standards, including 2 CFR §200.318(h) which stipulates that sufficient detail of the history of the procurement must be maintained, including the selection of the contractor.

Corrective Action Plan

Views of Responsible Officials and Corrective Action While the Organization concurred with the prior year (2022-003) and current year renumbered recommendation (2023-003), the Organization notes the corrective actions that have been implemented, specifically related to the incorporation of the procurement standards of the Uniform Guidance to its policies and procedures to ensure compliance with Federal standards, including 2 CFR §200.318(h); and development of a comprehensive HRSA group of related policies and procedures. A. Financial Policies – May 2025. While the Organization initially prioritized the completion and distribution of the updated financial policies and procedures by December 31, 2024, by May 2025, the Organization completed financial policies related to: implementation of significant accounting policies, internal control environment, cash and banking, cash disbursements and check issuance, payroll processes, procure to pay and revenue recognition policies, processes and procedures. In addition, when applicable, documenting procurement circumstances, processes, decisions and CEO approval was implemented via memo(s) to the procurement file (MTPF). B. Procurement Related Processes – May 2025. Simultaneous to the policy work described above, several processes to guide and align procurement practices, throughout the Organization, was initiated, including the use of MTPF, Request(s) for Professional Services Qualifications, Request(s) for Professional Services, Request(s) for Proposal, and to date implementation of the processes continue. C. HRSA Policies – July 2025. By July 2025, the Organization developed HRSA related policies re: implementation of HRSA policies; executive performance evaluation, non-executive performance evaluation, executive compensation, non-executive compensation, timesheets, suspension & debarment procedure, financial management system, legislative mandates, legislative mandates process & procedure and cash management for federal draws and return of funds. D. Board Policy Provision & Awareness – August 2025. In August 2025, the Board was provided policies developed within the Organization’s policy framework, including the above policies. The current practices of the Organization, to the present period of the report dated March 2, 2026, is consistent with such developed policies.

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 1176963 2023-002
    Material Weakness Repeat
  • 1176964 2023-003
    Material Weakness Repeat
  • 1176965 2023-004
    Material Weakness Repeat
  • 1176966 2023-005
    Material Weakness Repeat
  • 1176967 2023-006
    Material Weakness Repeat
  • 1176968 2023-002
    Material Weakness Repeat
  • 1176970 2023-004
    Material Weakness Repeat
  • 1176971 2023-005
    Material Weakness Repeat
  • 1176972 2023-006
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.932 NATIVE HAWAIIAN HEALTH CARE SYSTEMS $5.61M
84.362A NATIVE HAWAIIAN EDUCATION $711,178
93.011 NATIONAL ORGANIZATIONS FOR STATE AND LOCAL OFFICIALS $143,172
93.243 SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE $117,660
93.387 NATIONAL AND STATE TOBACCO CONTROL PROGRAM $110,263
93.426 THE NATIONAL CARDIOVASCULAR HEALTH PROGRAM $72,971
93.185 IMMUNIZATION RESEARCH, DEMONSTRATION, PUBLIC INFORMATION AND EDUCATION TRAINING AND CLINICAL SKILLS IMPROVEMENT PROJECTS $56,604
93.859 BIOMEDICAL RESEARCH AND RESEARCH TRAINING $35,481
93.421 STRENGTHENING PUBLIC HEALTH SYSTEMS AND SERVICES THROUGH NATIONAL PARTNERSHIPS TO IMPROVE AND PROTECT THE NATION’S HEALTH $30,763
45.311 NATIVE AMERICAN AND NATIVE HAWAIIAN LIBRARY SERVICES $24,589
93.334 THE HEALTHY BRAIN INITIATIVE: TECHNICAL ASSISTANCE TO IMPLEMENT PUBLIC HEALTH ACTIONS RELATED TO COGNITIVE HEALTH, COGNITIVE IMPAIRMENT, AND CAREGIVING AT THE STATE AND LOCAL LEVELS $9,374