Finding Text
Condition 2025-02 The Organization did not have written procedures for determining the allowability of costs charged to Federal awards. In addition, the Organization did not have documented procurement policies and procedures governing procurement transactions under Federal awards. Criteria 2 CFR Section 200.302(b)(7) requires a recipient or subrecipient's financial management system to provide for written procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200 and the terms and conditions of the Federal award. 2 CFR Section 200.318(a) requires a recipient or subrecipient to maintain and use documented procedures for procurement transactions under a Federal award. The procedures must conform to applicable Federal, State, and local laws and regulations and the standards identified in 2 CFR Sections 200.317 through 200.327. Cause The Organization had not established and implemented formal written policies and procedures to govern Federal award expenditures and procurement activities. Effect The absence of written allowable cost and procurement procedures increases the risk that Federal funds may be used for costs that are not allowable under the terms and conditions of the Federal award or that procurement transactions may not comply with applicable Federal requirements. Recommendation We recommend that the Organization establish, document, and implement written procedures for determining the allowability of costs charged to Federal awards. We also recommend that the Organization establish and implement documented procurement procedures addressing, at a minimum, procurement methods, competition requirements, contractor selection and evaluation, cost and price analysis, contractor responsibility, conflicts of interest, suspension and debarment, applicable contract provisions, procurement records, and other requirements applicable to Federal awards. Views of Responsible Officials In 2026, written procedures governing the allowability of costs charged to Federal awards and procurement activities involving Federal funds were developed, documented, and implemented. Responsibility for implementing and maintaining these procedures has been assigned to the Finance Department. The procedures address applicable Federal requirements for determining allowable costs and procurement activities and will be reviewed periodically and updated as necessary to maintain compliance with applicable Federal requirements.