Finding 41442 (2022-005)

Material Weakness
Requirement
I
Questioned Costs
$1
Year
2022
Accepted
2023-08-25
Audit: 37685
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The Facility failed to obtain multiple vendor quotes for flooring purchases exceeding the micro-purchase threshold and did not verify vendor status against the central contractor registry.
  • Impacted Requirements: Noncompliance with 2 CFR 200.303(a) and 2 CFR 200.318-327 regarding procurement procedures and vendor checks for suspension or debarment.
  • Recommended Follow-Up: Review and strengthen procurement policies, implement internal controls for compliance, and ensure proper documentation is retained for all procurement activities.

Finding Text

2022-005 Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Facility is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non-Federal entity?s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Facility did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro-purchase threshold. In addition, the vendor was not verified against the central contractor registry prior to transaction inception or on a periodic basis to ensure the vendor was not suspended or debarred. Cause: The Facility did not follow their procurement policies currently in place. Effect: Without obtaining multiple quotes and performing a vendor check for suspension and debarment, demonstrating that the Facility complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: Covered transactions entered into by the Facility over the micro-purchase threshold totaled $73,531. Questioned costs are unable to be identified as multiple quotes were not received by the Facility to ensure the price paid was reasonable. Context: Sampling was not used as only one vendor was utilized by the Facility for flooring purchases. Repeat Finding from Prior Years: No Recommendation: We recommend the Facility review their procurement policies in place, implement internal control processes to ensure compliance with their procurement policies, and retain documentation to support procurement, suspension and debarment procedures performed. Views of Responsible Officials: Management agrees with the finding.

Corrective Action Plan

Finding 2022-005 Federal Agency Name: Department of Health and Human Services Program Name: COVID-19 Testing and Mitigation for Rural Health Clinics FFAL #93.697 Compliance Requirements: Procurement, Suspension, and Debarment Finding Summary: The Facility did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro-purchase threshold. In addition, the vendor was not verified against the central contractor registry prior to transaction inception or on a periodic basis to ensure the vendor was not suspended or debarred. Responsible Individuals: Phillip Husher, CFO, Freeman Regional Health Services Corrective Action Plan: Going forward Freeman Regional Health Services will obtain and retain quotes from multiple vendors based on our procurement policies. Documentation will be retained to support the decision of the vendor selected. Also, we will review the Central Contractor Registry to ensure vendors are not suspended or debarred before entering into covered transactions. Anticipated Completion Date: September 30th, 2023

Categories

Questioned Costs Procurement, Suspension & Debarment

Other Findings in this Audit

  • 41440 2022-003
    Material Weakness
  • 41441 2022-004
    Significant Deficiency
  • 617882 2022-003
    Material Weakness
  • 617883 2022-004
    Significant Deficiency
  • 617884 2022-005
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.498 Provider Relief Fund $328,978
93.697 Covid-19 Testing for Rural Health Clinics $300,000
93.155 Rural Health Research Centers $258,376
10.766 Community Facilities Loans and Grants $139,816
93.461 Covid-19 Testing for the Uninsured $23,977
93.301 Small Rural Hospital Improvement Grant Program $12,836
10.557 Special Supplemental Nutrition Program for Women, Infants, and Children $4,934