Finding Text
2025-004 – Hearts for the Invisible Charlotte Coalition did not follow established Federal procurement procedures and maintain required procurement documentation. Federal Agency: Department of the Treasury Assistance Listing Number: 21.027 Award Period: 05/01/2023 to 04/30/2026 Type of Finding: Significant Deficiency in Internal Controls Over Compliance for Each Major Program Criteria or Specific Requirement: Under 2 CFR § 200.318(a), recipients and subrecipients must “maintain and use documented procedures for procurement transactions under a Federal award or subaward.” Additionally, 2 CFR § 200.318(i) requires that “the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction,” including: Rationale for the method of procurement, Selection of contract type, Contractor selection or rejection, and Basis for the contract price. Condition: During our audit of procurement activities under Federal award 21.027, we noted that the Organization did not follow its documented procurement procedures. Specifically:The procurement plan lacked evidence of adherence to competitive procurement methods as required under 2 CFR § 200.320. No documentation was maintained to support when or how procurement decisions were made, including missing records of contractor selection, price justification, and procurement method rationale. Context: The finding pertains to two purchases tested under Assistance Listing 21.027 for which sufficient documentation was not maintained to demonstrate compliance with the Organization’s procurement procedures and applicable Federal requirements. Cause: The Organization did not implement adequate internal controls to ensure compliance with Federal procurement standards. Procurement activities were conducted informally without sufficient oversight or documentation, and staff were not adequately trained on Uniform Guidance requirements. Effect: Failure to follow documented procurement procedures and maintain required records increases the risk of: Noncompliance with Federal regulations, Unfair or noncompetitive procurement practices, Inability to justify expenditures to Federal agencies or auditors, and Disallowed costs or questioned costs during Federal review. Repeat Finding: Yes Auditor’s Recommendation: We recommend that the Organization: Implement and enforce the updated procurement policy. Train staff on Federal procurement requirements. Implement a checklist or control mechanism to ensure all required documentation is retained for each procurement transaction. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the finding and agrees with the recommendation. The Organization updated its procurement policy in February 2026 to align with applicable Federal procurement requirements. Management will implement and enforce the procurement methods established in the updated policy, provide training to relevant staff on Federal procurement requirements, and maintain the required supporting documentation for applicable procurement transactions going forward.