FAC Explorer

Finding 503610 (2024-001)

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Requirement
I
Questioned Costs
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Year
2024
Accepted
2024-10-24
Audit: 325801
Organization: Hubbs-Seaworld Research Institute (CA)
Auditor: Leaf & Cole LLP

AI Summary

  • Core Issue: Two out of three vendors lacked documentation showing procurement was conducted fairly and in compliance with federal regulations.
  • Impacted Requirements: Non-compliance with 2 CFR sections 200.319 and 200.303, which require proper documentation and internal controls for procurement processes.
  • Recommended Follow-Up: Hubbs-SeaWorld Research Institute should enhance procurement policies and ensure all documentation is maintained to prevent future compliance issues.

Finding Text

Condition: During our testing we noted that for 2 out of 3 vendors selected for procurement testing there was no documentation to demonstrate that procurement was conducted in full and open competition according to 2CFR section 200.319 or any documentation of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified per 2CFR sections 200.319 and 200.320(f) and 48 CFR section 52.244-5. Criteria: 2 CFR 200.303 requires non-federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to ensure procurement files are complete and adequately document decisions made to sole source procurements of goods and services in accordance with the Institute’s procurement policies. Cause: Hubbs-SeaWorld Research Institute’s procurement policy was not in alignment with the procurement compliance requirements stated in 2 CFR 200.303. Effect: Hubbs-SeaWorld Research Institute did not document and maintain records for the procurement of goods and services resulting in noncompliance with the procurement compliance requirements stated in 2 CFR 200.303 during the year ending June 30, 2024. Recommendation: Hubbs-SeaWorld Research Institute should improve its policies and procedures regarding the procurement process and maintain documentation. Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance.

Corrective Action Plan

Management Response: The management staff of Hubbs-SeaWorld Research Institute take very seriously the federal compliance related to the procurement of goods and services. Hubbs-SeaWorld Research Institute acknowledges the finding and has subsequently updated their procurement policy and procedures to be in compliance with 2 CFR 200.303. Management has adopted a plan of action to prevent future instances of non-compliance. Action Taken: Hubbs-SeaWorld Research Institute plans to modify its procurement procedures for federal grants to comply with 2CFR section 200.319 by continuing to require at least three bids (or a sole source statement, if applicable) for any purchases over the micro-purchase threshold, currently $10,000. In addition, we will monitor cumulative vendor purchases on a monthly basis to ensure that price or rate quotations are obtained from an adequate number of qualified sources, that is, at least three bids (or a sole source statement, if applicable.)

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
15.605 Sport Fish Restoration Program $316,000
10.001 Agricultural Research_basic and Applied Research $131,393
11.417 Sea Grant Support $116,394
11.454 Unallied Management Projects $111,590
11.439 Marine Mammal Data Program $92,500
11.427 Fisheries Development and Utilization Research and Development Grants and Cooperative Agreements Program $31,401