Finding Text
Noncompliance with Procurement Requirements and Material Weakness in Internal Control over Procurement and Suspension and Debarment Assistance Listing Number: 14.251 Name of Federal Program or Cluster: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Name of Federal Agency: Department of Housing and Urban Development Name of Pass-Through Entities: N/A Procurement and Suspension and Debarment 2 CFR§200.318(i) requires the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 2 CFR§200.303 requires the Organization to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). WRTP entered into a contract with a vendor greater than the simplified acquisition threshold to perform services under the federal award. WRTP was unable to provide records sufficient to detail the history of the procurement transaction. WRTP had turnover during the year with the positions that assisted with the procurement transactions. WRTP was unable to locate the records requested with their departures. Failure to keep adequate procurement records limits the ability to determine that procurement complied with applicable Uniform Guidance procurement standards or whether the procurement provided the required degree of competition. We recommend that WRTP implement procedures to ensure that adequate documentation is maintained for all procurements subject to the Uniform Guidance. Procurement files should document the procurement method used, vendors solicited, bids or quotations received, the basis for vendor selection or rejection, and the basis for determining contract price is reasonable. No Management concurs with the finding and recognizes the importance of maintaining consistent documentation supporting compliance with federal procurement, suspension, and debarment requirements. While WRTP|BIG STEP has procedures in place intended to ensure that it is in compliance with procurement requirements for federally funded activities, management acknowledges that documentation supporting those procedures was not maintained in a manner sufficient to satisfy audit requirements. During 2026, Management will establish standardized compliance checklists and procedures to ensure procurement requirements are being met. The planned hiring of a Finance Director will further strengthen oversight and accountability related to federal grant compliance and documentation requirements. The Finance Director will be responsible for overseeing grant financial management, federal and state grant compliance, implementation of internal controls, maintenance of supporting grant documentation, development and monitoring of compliance procedures, audit coordination, and ongoing verification that required documentation is maintained in accordance with federal regulations and Uniform Guidance requirements. Management believes these enhancements will strengthen internal controls over federal grant compliance and ensure adequate support is maintained for future audits.