Finding 479688 (2023-005)

2023-005 ALN 14.850 - Public & Indian Housing Program - Procurement Condition and Criteria: According to the U.S. Department of Housing and Urban Development (HUD) regulations, specifically 2 CFR Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), PHAs are required to establish and maintain written procurement procedures. These procedures must ensure that all procurement transactions are conducted in a manner providing full and open competition, avoiding unnecessary or duplicative purchases, and to ensure that contracts are awarded only to responsible contractors. During our audit, it was noted that the PHA did not perform any procurement procedures for purchases made with a vendor during the audit period. Purchases totaled $65,706, of which multiple transactions were subject to procurement procedures, such as obtaining the required number of quotes and documenting those procedures. Specifically, the written procurement policies and documentation requirements were not followed. Amount of Questioned Costs: None Context: There were no procurement procedures performed and no documentation of the necessary number of quotes required for purchases with Whitaker Flooring totaling $65,706 during the year. Cause: The cause of this non-compliance was the absence of established internal controls and procedures related to procurement under prior management. The PHA did not have a designated individual or department responsible for overseeing and ensuring compliance with procurement regulations. Effect: As a result, the PHA was not in compliance with federal procurement regulations. This lack of procurement procedures increases the risk of fraud, waste, and abuse of federal funds, and it may result in questioned costs and potential disallowances. Auditor’s Recommendation: We recommend that the PHA follow their written procurement procedures in accordance with 2 CFR Part 200. These procedures should include guidelines for competitive bidding, contractor selection, contract monitoring, and documentation requirements. The PHA should also provide training to all relevant staff on the procurement procedures and designate a responsible individual or department to oversee procurement activities. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation.