Finding Text
INTERNAL CONTROL – MATERIAL WEAKNESS AND NONCOMPLIANCE
COVID-19 – Coronavirus State and Local Fiscal Relief Funds – 21.027
2023-004 – Procurement
Criteria:
The City is responsible for establishing and maintaining a procurement policy which is compliant with the Uniform Guidance in 2 CFR 200.320. In addition, the City is responsible for maintaining adequate records relating to procurements.
Condition:
The City’s procurement policy lacks the specific methods of procurement to be followed and the respective thresholds for procurements using federal funds. Furthermore, there is not adequate pre-award documentation maintained relating to each of the City’s procurements.
Cause:
The City’s procurement policy was not adequately updated with necessary Uniform Guidance requirements. In addition, the City’s procurement process is not centralized and there is inadequate or missing pre-award documentation pertaining to the City’s various procurements.
Effect:
The condition above could result in material program and internal control issues relating to procurements whereby: appropriate methods of procurement may not be followed, debarred or suspended vendors or contractors could be awarded purchase orders or contracts, open and fair competition may not be achieved, etc.
Context:
Audit procedures noted that the procurement policy is inadequate and not in line with Uniform Guidance. Furthermore, audit procedures noted that there is no centralized process in place for tracking the City’s various procurements along with inadequate pre-award documentation. There was a total of $1,609,137 of expenditures relating to procurements during the year ended December 31, 2023; however, documentation was not deemed adequate to substantiate the procurements and whether they complied with Uniform Guidance.
Questioned Costs:
We questioned $1,609,137 of costs because this was the total that was expended during the year ended December 31, 2023, for items or services for which procurement policies should have been followed. Our testing surrounding procurement in the current year noted that there is not appropriate pre-award documentation and an improper procurement policy that would permit the testing of procurements.
Recommendation:
We recommend that the City adopt a proper procurement policy that is in line with Uniform Guidance. We further recommend that the City develops a centralized procurement process whereby appropriate procurement type is documented along with the maintenance of proper pre-award documentation.