Finding Text
Assistance Listing: 66.957 Greenhouse Gas Reduction Fund: National Clean Investment Fund and 66.959 Greenhouse Gas Reduction Fund: Solar for All Finding No. 2025-002: Significant Deficiency in Controls Over Procurement Documentation and Approvals Condition: During testing of procurement transactions for the Solar for All (SFA) and Greenhouse Gas Reduction Fund: National Clean Investment Fund (GGRF) programs, documentation supporting required procurement approvals was not consistently maintained. Specifically, for one (1) of two (2) procurements tested under the SFA program ($130,000), required pre-approval by the Finance Department was not documented. For both procurements tested under the GGRF National Clean Investment Fund program ($36,094), written evidence of approval was not available; management indicated that approvals had been obtained verbally. Criteria: Non-federal entities are required to maintain effective internal controls over procurement to ensure compliance with Uniform Guidance (2 CFR 200.318–200.320). This includes ensuring that procurements are properly authorized in accordance with established policies, retaining sufficient documentation to support procurement decisions and approvals, and maintaining a clear audit trail demonstrating adherence to applicable requirements. Cause: These conditions appear to be attributable to inadequate documentation retention practices and the absence of formalized procedures requiring written evidence of procurement approvals. Additionally, reliance on verbal approvals and challenges associated with system transitions contributed to gaps in the retention of supporting documentation. Effect or Potential Effect: The lack of documented procurement approvals increases the risk of noncompliance with federal procurement requirements and weakens the audit trail supporting that purchases were appropriately authorized. As a result, there is an increased risk of questioned costs and reduced transparency and accountability over the use of federal funds. Questioned Costs: None Perspective Information: The exceptions identified appear to be primarily related to documentation and consistency in evidencing procurement approval controls rather than an indication that approvals were not obtained in all cases. Management indicated that certain approvals were performed verbally; however, these were not consistently supported by written documentation. Strengthening documentation practices and formalizing approval procedures will enhance transparency, support compliance with Uniform Guidance requirements, and improve the organization’s ability to demonstrate that procurement activities are appropriately authorized. Addressing these matters will also promote a more consistent and auditable control environment over federally funded procurements. Identification of Repeat Finding: Not applicable since this is a new finding. Recommendation: We recommend that management strengthen procurement controls by requiring documented, written approval for all procurements prior to execution and establishing standardized approval workflows and documentation requirements. Management should also maintain a centralized repository for procurement records to support accessibility and retention, and enhance data backup and migration procedures to mitigate the risk of loss of supporting documentation during system changes. Views of Responsible Officials: Management agrees with the finding. While procurement approvals were obtained, documentation was not consistently retained due to reliance on verbal approvals and limitations associated with a system transition. Management has implemented corrective actions to strengthen controls, including requiring documented, written approval for all procurements and establishing a centralized repository for procurement documentation. Standardized approval workflows will be used to ensure approvals are properly evidenced and retained. Additionally, data retention and backup procedures have been enhanced to prevent future loss of documentation. Management will incorporate these controls into formal policies and procedures and monitor compliance to ensure consistent application across programs.