Finding Text
2025-005 ALN 14.850 – Public Housing Operating Fund – Procurement and Suspension and Debarment Condition and Criteria: In accordance with 2 CFR part 215.40 through 215.48, all procurement transactions should be conducted in a manner in which to provide, to the maximum extent practical, open and free competition. It also states that some form of cost or price analysis shall be made and documented in the procurement files in connection with every procurement action. Lastly, in accordance with the Authority’s Procurement Policy, small purchase procedures for purchases or procurement of goods and services in excess of $10,000, or $2,00 for construction services, but not exceeding $250,000 requires documentation of all quotes that must be maintained in the procurement file. Also, in accordance with 2 CFR part 180, for covered transactions, non-Federal entities are required to verify that entities are not suspended, debarred, or otherwise excluded before contracting with the entities. During our audit, it was determined that internal control deficiencies over compliance existed related to the Authority’s compliance with the Public Housing Operating Fund program’s procurement and suspension and debarment compliance provisions. It was determined that these internal controls were likely ineffective as current management was unable to provide adequate files and supporting documentation to support procurement actions during the fiscal year ended June 30, 2025. Amount of Questioned Costs: None Context: The Authority was unable to provide adequate files and supporting documentation to support procurement actions during the fiscal year end June 30, 2025. Cause: As a result of the determination that the internal controls over procurement and suspension and debarment were likely to be ineffective, and due to the fact that the Authority waws unable to locate any procurement files for our audit, no tests of noncompliance were performed. Effect or Potential Effect: As a result of a lack of supporting documentation on file, the Authority may have procured goods and services that did not provide for open and free competition, or that were not reasonably priced which could have led to Federal funding waste. Also, the lack of evidence that the Authority obtained verification that awarded contractors were not suspended or debarred means that the Authority may have entered into covered transactions with contractors who were prohibited from contracting on projects using Federal awards, which opens up the Authority to the potential for contracting with a contractor who may have previously committed fraud, embezzlement, theft, etc., or that has a history of failing to perform. Auditor’s Recommendation: We recommend that the Authority review over all of their ongoing contracts and, for those contracts that are missing or expired, perform the necessary procurement actions and ensure that all procurement actions are adequately documented and maintained on file in accordance with the Authority’s Board-approved Procurement Policy. In addition, the Authority should ensure all those involved in the procurement process are provided adequate Public Housing procurement training. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.