Finding Text
of Health and Human Services, Passed Through Substance Abuse and
Mental Health Services Administration,
Section 223 Demonstration Programs to Improve Community Mental Health Services
Listing 93.829, H79SM085287, 8/31/2022 – 8/30/2023
Procurement, Suspension and Debarment
Material Weakness in Internal Control over Compliance
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective
internal control over the federal award that provides assurance that the entity is
managing the federal award in compliance with federal statutes, regulations and
conditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee must
maintain written standards of conduct covering conflicts of interest and governing the
actions of its employees engaged in the selection, award, and administration of
contracts. Federal regulations state that the auditee must have written procedures for
procurement transactions.
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: Hope’s formally documented policy did not include many of the necessary procurement
provisions until it was revised in February 2024. Expenditures under the federal grants
did not have a consistent control in place to check applicable vendors for potential
suspension and/or debarment for covered transactions, and controls were not
documented to provide for a proper audit trail.
Cause: For the year under audit, Hope did not have a consistent procurement process in place
including all federal requirements or to check vendors under covered transactions
($25,000 or more) in accordance with federal regulations.
Effect: Hope could be out of compliance with federal requirements when entering into
procurement contracts as well as not meeting suspension and debarment requirements
by potentially contracting with a suspended or debarred vendor.
Questioned costs: None reported.
Context: Procurement requirements were applicable to 1 vendor, which was selected for testing
and was in excess of the micro-purchase threshold but were not in excess of $250,000.
Suspension and Debarment requirements were applicable to both transactions for this
vendor tested. Subsequent to year-end, Hope’s procurement policy has been updated.
Repeat Finding
From Prior Year: Yes Recommendation: This finding was noted in the prior year where the policy could not be put into place for
the FY2023 audit procedures. We recognize that the policy has been updated and will be
followed going forward.
Views of Responsible
Officials: We agree with the finding.