Finding Text
2024-004 Noncompliance Related to Conflict-of-Interest Policies ALN: 10.766 Program: Emergency Rural Health Care Grant Agency: US Department of Agriculture Compliance Requirement: I Procurement Suspension & Debarment Criteria: Per the entity’s conflict-of-interest policy and Uniform Guidance, officers and key employees must disclose any actual or apparent conflicts of interest, including related party transactions. Such transactions should be reviewed and approved by those charged with governance. Finding/ Condition: During our audit, we identified transactions between the Organization and a vendor owned or controlled by officers and family members of officers of the Organization. These transactions were not appropriately disclosed to the Board of Directors and were not subject to documented review or approval in accordance with the Organization’s conflict-of-interest policy. Questioned Cost: $476,957 Effect: Failure to disclosure conflicts of interest increases the risk of improper use of federal funds. This lack of transparency and oversight by management can set an inappropriate tone for the organization. This also increases the risk of noncompliance with federal requirements. Cause: Management did not adhere to established conflict-of-interest policies and procedures. Additionally, internal controls were not designed or operating effectively to identify and monitor related party transactions. Repeat Finding: Yes. Recommendation: We recommend that management: • Strengthen controls over identifying and disclosing related party transactions. • Require annual conflict-of-interest disclosures from all key personnel. • Ensure all related party transactions are fully disclosed, reviewed for reasonableness and approved by the Board or an independent committee. • Provide training on compliance with federal requirements. Views of Responsible Officials and Corrective Action Plan: Please see page 34 for the views of responsible officials and corrective action plan.