FAC Explorer

Finding 2671 (2023-002)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2023
Accepted
2023-11-29
Audit: 4489
Organization: Boys & Girls Clubs of Kennebec Valley (ME)
Auditor: One River CPAS

AI Summary

  • Core Issue: The organization failed to comply with procurement standards by not documenting the review of contractors for suspension and debarment.
  • Impacted Requirements: This noncompliance violates 2 CFR 200, which mandates checks against suspended or debarred parties before contracts are finalized.
  • Recommended Follow-Up: Management should establish a formal process for reviewing suspension and debarment and ensure all subcontractors are checked before hiring.

Finding Text

2023-002 Noncompliance with Procurement, Suspension, & Debarment Standard – 21.027 (Significant Deficiency – Noncompliance) Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.214 prohibits non-federal entities from contracting with parties that are suspended or debarred under covered transactions. Condition and Context – Audit procedures revealed that there was not a process in place to formally document the review of the contracted entity for suspension and debarment prior to entering into the agreement. Cause – The Organization does not have a formal process to document suspension and debarment. Management was unaware of the requirement, though it was clear that management thoughtfully considered the contractor’s reputation and determined that the contractor was suited for the agreement. Effect –The Organization did not perform its review of suspension and debarment for this agreement, though the contractor was found to not be on prohibited lists at annual review. Questioned Costs – None Recommendations – Management should strengthen their processes, controls, and review over suspension, and debarment processes and ensure compliance with Uniform Administrative Requirements. Views of Responsible Officials and Planned Corrective Actions – Request constructions manager to check suspension and debarment of all subcontractors prior to hire if project has not already been started.

Corrective Action Plan

CORRECTIVE ACTION PLAN November 7, 2023 U.S. Department of Health and Human Services Boys and Girls Clubs of Kennebec Valley respectfully submits the following corrective action plan of the year ended June 30, 2023. Name and address of independent public accounting firm: One River CPAs 46 FirstPark Drive, Oakland, ME 04963 FINDING – FINANCIAL STATEMENT AUDIT 2023-001 – Material Weakness – Internal Control Material Weakness in Internal Control: Property and equipment adjustments were necessary to expense equipment below the capitalization policy. Additionally, depreciation expense was adjusted based on a revised useful life of the disposal of the old building as required for the financial statements to be fairly stated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Also, a gifts in kind adjustment was necessary to adjust for a duplicated item. The following errors were noted and corrected as a result of audit procedures: • Building Improvements was overstated by $122,249 • Net assets without donor restrictions were overstated by $258,704 • Revenues were understated by $252,387 • Expenses were understated by $115,932 Recommendation: Management should strengthen their review over purchases for compliance with their capitalization policy, review of useful lives of assets, and review the accuracy of recording gifts in kind revenue and expenses. Responsible Person for Corrective Action: Paula Burke, CFO Corrective Action to be Taken: CEO & CFO will review capitalization policy with the Finance Committee, and monthly during Finance Committee meetings review any expenditures over $10,000. CFO will review gifts in-kind with Resource Development Director prior to end of fiscal year adjustments. The anticipated completion date for this corrective action is January 2024 and June 2024. FINDING – FEDERAL AWARD PROGRAMS AUDIT U.S. Department of the Treasury 2023-002 – 21.027 Coronavirus State and Local Fiscal Recovery Funds Significant Deficiency and Noncompliance: There was not a process in place to formally document the review of the contracted entity for suspension and debarment prior to entering into the agreement. Recommendation: Management should strengthen their processes, controls, and review over suspension, and debarment processes and ensure compliance with Uniform Administrative Requirements. Responsible Person for Corrective Action: Paula Burke, CFO Corrective Action to be Taken: Request construction manager to check suspension and debarment of all subcontractors prior to hire, if project has not already been started. The anticipated completion date for this corrective action is November 2, 2023. Per contact with Joe Lajoie (construction manager), he confirmed none of the contractors were on the debarment and suspension list. If the U.S. Department of Health and Human Services has questions regarding this plan, please contact Paula Burke, CFO at 207-582-8458 or pburke@bgckv.org. Sincerely, Ingrid Stanchfield, Chief Executive Officer

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 2672 2023-002
    Significant Deficiency
  • 2673 2023-002
    Significant Deficiency
  • 579113 2023-002
    Significant Deficiency
  • 579114 2023-002
    Significant Deficiency
  • 579115 2023-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $155,890
93.558 Temporary Assistance for Needy Families $152,666
10.558 Child and Adult Care Food Program $141,161
93.575 Child Care and Development Block Grant $133,553
84.287 Twenty-First Century Community Learning Centers $97,500
16.726 Juvenile Mentoring Program $19,911
10.559 Summer Food Service Program for Children $5,992