Finding Text
2022-001 Federal Agency: United States Department of Health and Human Services Federal Program Title: Health Center Cluster Assistance Listing Numbers: 93.224/93.527 Award Periods: March 1, 2021 through February 28, 2022, March 1, 2022 through February 28, 2023, April 1, 2021 through March 31, 2023. Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: The Code of Federal Regulations section 200.320 states the non-Federal entity must have and use documented procurement procedures following specific requirements for different methods of procurement depending on size and type of purchase. Thresholds for these categories (micro-purchase, simplified acquisition threshold) refer to using the Federal Acquisition Regulations (FAR), unless a different threshold has been specifically approved. Specifically, under FAR multiple quotes are generally required for purchases over the micro-purchase threshold, or documentation should be maintained explaining why multiple quotes were not obtained. Condition: During our testing, we noted the Center did not have a properly documented procurement policy that met the federal requirements for the full year. The policy was revised in June 2022 to be in compliance. As a result there were vendors over the micro purchase threshold prior to the policy change that were tested where retained documentation was not sufficient to support procurement method or noncompetitive procurement in line with federal requirements. Context: During our testing, it was noted that through June 2022 the Center had documented procurement policy procedures, which described individuals and parties responsible throughout the procurement process; however, it did not contain all of the necessary elements, as required by federal regulations. Specifically, purchases under $25,000, but above the micro-purchase threshold, did not require multiple price quotes. Due to the Center's policy, the internal micro-purchase threshold is set at $25,000, so for purchases between $10,000 (maximum micro-purchase threshold without specific approval for a higher threshold), there was not documentation or support for multiple price quotes, or documentation on why sole source procurement was followed. There are also circumstances of vendors over $25,000 in total where noncompetitive procurement was utilized, but documentation wasn?t necessarily retained on why and how it fit within the Center?s policy and federal requirements. With adoption of the new policy during 2022 these thresholds were changed to be in line with federal requirements, and procedures implemented to properly document procurement method, cost analysis, and justification for noncompetitive procurement, as applicable. Cause: The Center had not yet fully updated their procurement policy to meet Uniform Guidance requirements. There was a prior year audit finding related to the procurement policy, but due to the timing of audit issuance, the corrective action was not able to be implemented back to the beginning of 2022. Effect: The lack of documented procurement policies over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: Yes ? 2021-001 Recommendation: As the policy has already been revised, we recommend the Center follow the requirements under the new policy and ensure documentation is maintained as appropriate to support each procurement method. We also recommend implementing procedures to monitor vendor totals to identify situations where a vendor originally expected to be under a procurement threshold, subsequently exceeds it. In the event this happens, analysis and documentation would be necessary to support the continued use of the vendor. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. Management has revised the procurement policy to meet Uniform Guidance requirements, and will ensure the new policy and procedures are followed moving forward.