Finding Text
Identification of the Federal Program - Coronavirus State and Local Fiscal Recovery Funds - Assistance Listing Number 21.027
Criteria - 2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Per the City’s Ethics and Fiscal Policy and Procedures Manual, all contracts that create a commitment between the City and another party are to be routed from the originating department through the appropriate departments for signature approval prior to execution of the agreement by the Mayor. The signatures should be listed on the pre-numbered routing sheet obtained from the Finance Department. The signatures should include the appropriate individuals: department head, Director of Finance, legal department, Chief of Staff, Mayor, and City Clerk. This policy is designed to prevent unauthorized commitments and ensure compliance with procurement regulations.
Condition - The City entered into a contract with a consulting firm which obligated the City to pay a monthly fee of $20,668 for a period of two years. Instead of following the typical contract approval, the contract was only signed by one individual.
Effect - The failure to obtain the other approvals undermines the internal controls established by the City’s procurement policy. This increases the risk of unauthorized or improper contractual commitments and potentially exposes the city to legal and financial liabilities. Additionally, it diminishes the accountability and transparency of the procurement process.
Cause - The deviation from the established procurement procedure appears to be due to a lack of awareness and oversight. The Mayor assumed sole responsibility for contract execution, without seeking the necessary additional approval. There may also be insufficient training or reminders regarding the contract routing requirement.
Recommendation - The City should reinforce its procurement policies through regular training and clear communication to all relevant staff members. Specifically, the importance of using a contract routing sheet and obtaining all required signatures on contracts should be emphasized. Additionally, implementing a periodic review process to ensure compliance with this policy can help prevent future occurrences. Steps should also be taken to review past contracts for similar issues and take corrective action where necessary.
Views of Responsible Officials - The City agrees with the finding. The City will implement additional review procedures over contract approvals.