Finding Text
Finding Number: 2024-007 Procurement/Suspension and Debarment Procurement policy not followed and suspension and debarment checks not completed – Material weakness in internal controls, material noncompliance Assistance Listing Number: 93.193 Program Title: Urban Indian Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Indian Health Services Criteria: The Uniform Guidance at 2 CFR §§ 200.318–200.327 requires non-federal entities to establish and maintain written procurement policies and procedures that reflect applicable federal requirements and ensure compliance with federal procurement standards. These requirements apply regardless of the volume or frequency of procurement activity. In addition, 2 CFR § 200.213 and 2 CFR Part 180 require non-federal entities to ensure that they do not enter into covered transactions with vendors or contractors that are suspended or debarred and to have procedures in place to verify vendor eligibility prior to entering into such transactions. Condition: As a result of auditor testing, it was found that NACA did not follow written procurement policies and procedures during the audit period. Management indicated that procurement activity is limited and typically consists of routine or low-dollar purchases; however, no formal process existed to ensure that purchases made with federal funds complied with Uniform Guidance procurement requirements. Additionally, NACA did not have a documented process to verify whether vendors or contractors were suspended or debarred prior to entering into covered transactions, nor was evidence of such verification retained. NACA did not have a control process to ensure oversight over procurement policies and over suspension and debarment checks. Cause: During the year ended December 31, 2024, NACA has limited administrative resources and believed that the infrequency and low dollar amount of procurement activity did not necessitate formal procurement policies or suspension and debarment procedures. Effect: Without a suspension and debarment verification process and failure to follow established procurement policies and procedures, NACA is at increased risk of noncompliance with Uniform Guidance requirements, including the risk of entering into transactions with suspended or debarred vendors or failing to comply with applicable federal procurement standards. Recommendation: We recommend that NACA implement a process to obtain quotes for small purchases (individual purchases greater than $10,000) and to maintain documentation of those quotes. We also recommend that NACA implement a regular process for performing suspension and debarment checks for any vendors that are expected to be paid $25,000 or more on an annual basis and to maintain documentation of those checks. We also recommend NACA strengthen internal controls to ensure consistent adherence to existing procurement policies and procedures. This should include implementing monitoring or review controls to verify compliance with procurement requirements and ensuring that suspension and debarment checks are performed and documented for applicable transactions. Training may also be beneficial to reinforce staff understanding of procurement requirements and documentation expectations. Views of responsible officials: NACA concurs with the recommendation.