Finding Text
2023-003 - Inadequate Controls Over Federal Procurement and Suspension and Debarment Finding Type: Material weakness in internal control over compliance. Federal Award: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Criteria: The Uniform Guidance requires non-Federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the awards are administered in compliance with applicable federal statutes, regulations, and award terms and conditions. The federal procurement standards require non-Federal entities to maintain documented procurement procedures and records sufficient to support the history of each procurement, including the procurement method used, contractor selection or rejection, and the basis for the contract price. The standards also require written conflict-of-interest provisions, appropriate oversight of contractor performance, and inclusion of applicable federal provisions in contracts. Additionally, suspension and debarment requirements prohibit covered transactions with parties that are debarred, suspended, or otherwise excluded from participation in federal programs. Eligibility must be verified through the System for Award Management, a contractor certification, or an appropriate clause or condition in the covered transaction. Condition/Finding: During the audit, we noted that the Organization had not established and implemented sufficient controls over procurements charged to the federal program. Specifically, the Organization could not provide sufficient documentation demonstrating that: • The rationale for the procurement method and contractor selection was documented; • Potential conflicts of interest were evaluated; • Applicable contractors were verified as not suspended, debarred, or otherwise excluded; • Required federal provisions were included in applicable contracts; and • Contractor performance and compliance with contract terms were appropriately monitored. Cause: The Organization’s existing purchasing policies and procedures did not incorporate the federal-specific requirements applicable to procurements charged to federal awards. As a result, the Organization had not established a standardized process to identify, perform, document, and retain evidence of the required federal procurement and suspension and debarment procedures. Effect: The absence of appropriately designed and implemented controls creates a reasonable possibility that material noncompliance with federal procurement and suspension and debarment requirements could occur and not be prevented, or detected and corrected, on a timely basis. This could result in unsupported procurement decisions, transactions with ineligible contractors, contracts that omit required federal provisions, or inadequate oversight of contractor performance. Recommendation: We recommend that management adopt written federal procurement procedures and implement a standardized review process for procurements charged to federal awards. The process should address and document the procurement method and contractor selection, potential conflicts of interest, contractor eligibility, required federal contract provisions, and oversight of contractor performance. Documentation should be retained with each procurement file and be subject to appropriate management review and approval. View of Responsible Officials (Corrective Action): See corrective action plan.