Finding Text
Finding 2022-003: Internal control deficiency and noncompliance over small purchase procurement requirements. Identification of the federal program: Assistance Listing Number 93.918: ? Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease ? COVID-19 ? Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease ? U.S. Department of Health and Human Services ? Federal award identification numbers and award years: o 5 H76HA00151-31-00 ? January 1, 2018 to December 31, 2021 o 6 H76HA00151-31-01 ? January 1, 2018 to December 31, 2021 o 2 H76HA00151-32-00 ? January 1, 2022 to December 31, 2024 o 6 H76HA00151-32-01 ? January 1, 2022 to December 31, 2024 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A Chapter II Part 200 Subpart D 200.303 Internal controls states: ?The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? Title 2, Subtitle A Chapter II Part 200 Subpart D 200.318(i) General procurement standards state: ?The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.? Title 2, Subtitle A Chapter II Part 200 Subpart D 200.320(a)(2)(i) Small purchase procedures state: ?The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.? Condition: During our testing over small purchase procurements, we observed management did not have effective internal controls in place to ensure that price or rate quotations were obtained from an adequate number of qualified sources at the time of procurement. Cause: Management did not have effective internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above. Effect or potential effect: Small purchase procurements were not supported by effective internal controls and could potentially include unreasonable prices or rates. Questioned costs: None. Context: We tested the entire population of small purchase procurements, which consisted of two purchases totaling $25,353. Price or rate quotations were not obtained from an adequate number of qualified sources at the time of procurement for the two purchases. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management develop and implement internal controls to support the performance and documentation of small purchase procurement transactions. Views of responsible officials: Valleywise Health management will develop and implement additional layer of review regarding vendor selection and pricing quote for supplies and services to ensure compliance with federal guidelines on expenditures.