Finding Text
Program: Emergency Solutions Grant Assistance Listing No.: 14.231 Federal Agency: Department of Housing and Urban Development Pass-Through Agency: State of California and City of Salinas Federal Award Year: FY21-22 Compliance Requirement: Procurement and Suspension and Debarment Questioned Cost: $0 Repeat Finding: Yes Condition: The Agency’s documented procurement policy did not incorporate the federal procurement requirements as required under Uniform Guidance. During our audit, we identified procurement transactions that did not follow federally mandated procedures, including lack of competition, missing cost/price analysis, or inadequate documentation, etc. Criteria: Non-Federal entities must use their own documented procurement procedures which reflect applicable state and local laws and regulations, provided that the procurements also conform to applicable federal law and the standards identified in the Uniform Guidance. Cause: The Agency did not update its procurement policy to align with the procurement standards under the Uniform Guidance. Additionally, the existing policy was not operating effectively, as staff did not consistently follow established procedures or ensure compliance with federal procurement requirements. Effect: Failure to follow federally compliant procurement procedures increases the risk of unallowable costs being charged to the federal program and may result in questioned costs or disallowed expenditures. Recommendation: We recommend that the Agency revise its procurement policy to fully incorporate applicable federal requirements. In addition, the Agency should evaluate and strengthen internal controls to ensure the policy is effectively implemented. This includes providing staff training on federal procurement standards and establishing oversight procedures to ensure consistent compliance. Management’s Response: See Corrective Action Plan.