Finding Text
Reference Number: Prior Year Finding: 2025-010 2024-005 Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1 (5/23/2021 - 12/31/2026) Compliance Requirement: Procurement Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Audit documentation must be made available upon request to the cognizant or oversight agency for audit or its designee, cognizant agency for indirect cost, a Federal agency, or GAO at the completion of the audit, as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities consistent with the purposes of this part. Access to audit documentation includes the right of Federal agencies to obtain copies of audit documentation as is reasonable and necessary. (2 CFR 200.517(b)) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City could not provide complete procurement and contract documentation timely for audit review. Context: For two of eight contracts selected for testing, the City did not provide contract files or related procurement documentation, including the executed contract, procurement method, vendor selection support, or other documentation evidencing compliance with applicable procurement requirements. Cause: The City’s policies and procedures were not sufficient to ensure procurement and contract documentation related to Federal awards was centrally retained, complete, and readily available for audit. In addition, the City’s document retention and monitoring controls did not ensure that contract files contained all required supporting documentation prior to or during the audit period. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (25) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Effect: Since the City was unable to provide complete procurement and contract documentation, auditors could not verify whether the selected procurements complied with applicable Federal procurement requirements or whether the City maintained sufficient documentation to support the allowability and compliance of the related expenditures. The lack of available documentation increases the risk that procurement transactions may not be properly supported, reviewed, or conducted in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Questioned costs: Unable to determine. Recommendation: We recommend that the City strengthen its internal controls over procurement and contract documentation for Federal awards. Such procedures should require that complete contract files, including executed agreements, procurement method documentation, vendor selection support, approvals, and other required supporting documentation, be retained in a centralized location and reviewed for completeness. The City should also establish monitoring procedures to ensure documentation is maintained in accordance with Federal requirements and is available timely for audit or other oversight review. Views of Responsible Officials: There is no disagreement with the finding.