CRITERIA The Uniform Guidance requires non-federal entities to have documented procurement policies and procedures that reflect applicable federal, state, and local laws and regulations, as well as standards for the purchase of goods and services using federal funds. These requirements are intended to ensure full and open competition, proper cost management, and the allowability and allocability of costs charged to federal awards. In addition, effective internal controls require that procurement activities are properly documented and supported, including evidence of vendor selection, price or cost analyses, and contract terms, to ensure compliance with federal requirements and to support audit and monitoring activities. CONDITION AND CONTEXT UHU did not have a formally documented procurement policy in place that complies with the Uniform Guidance requirements. During our audit, we experienced difficulty obtaining complete procurement documentation for transactions selected for testing, including evidence of vendor selection, competitive bidding, or price analyses. In several instances, procurement documentation was not completed or maintained to support the purchase of goods and services charged to federal awards. In addition, due to the lack of adequate tracking of expenses by federal award and cost center within the accounting system, management was unable to provide a complete and reliable population of procurement transactions subject to federal requirements. As a result, the audit team was unable to identify a comprehensive population or select samples for testing to determine compliance with procurement standards. CAUSE These deficiencies occurred because management did not establish and implement a documented procurement policy in accordance with the Uniform Guidance. In addition, management did not implement controls to ensure that procurement activities were consistently documented and retained. Weaknesses in tracking expenditures by federal award and cost center further contributed to management’s inability to identify and monitor procurement transactions subject to federal compliance requirements. EFFECT OR POTENTIAL EFFECT Without a documented procurement policy and compliance with federal standards, there is an increased risk of noncompliance with the Uniform Guidance requirements, including noncompetitive procurement practices, the potential for unallowable or unreasonable costs to be charged to federal awards, and a lack of fair and open competition. This condition may result in purchases above prevailing market rates, failure to obtain the best value, or conflicts of interest with vendors or contractors not being identified or addressed. In addition, due to the lack of adequate tracking of expenditures by federal award, we were unable to obtain a complete and reliable population of procurement transactions. As a result, testing could not be effectively performed, and samples could not be selected to determine compliance with procurement requirements. This significantly limits the ability to verify compliance, increases the risk of undetected noncompliance, and may result in questioned costs, audit findings, or potential regulatory consequences. RECOMMENDATION Management should develop and implement a formal, documented procurement policy that complies with the Uniform Guidance, including requirements for full and open competition, vendor selection, cost or price analysis, and documentation of procurement decisions. This policy should be communicated to relevant personnel and consistently enforced. Management should also establish controls to ensure that all procurement transactions are properly documented and supported, including maintaining records of vendor selection processes, contracts, approvals, and basis for awarding purchases. In addition, management should strengthen accounting processes to ensure that expenditures are tracked by federal award, program, and cost center within the general ledger, enabling the identification of procurement transactions subject to federal requirements. Periodic monitoring and review procedures should be implemented to ensure compliance with procurement policies and federal requirements, and that all documentation is complete, accurate, and readily available for audit. Strengthening these controls will improve compliance, enhance transparency, and reduce the risk of questioned costs and regulatory findings.