Finding Text
Federal Program Information:
Funding Agency: Department of the Treasury
Title: Coronavirus State and Local Fiscal Recovery Fund Program
Assistance Listing Number: 21.027
Compliance Requirement: Procurement
Award Year: July 1, 2022 to June 30, 2023
Condition: During our testing of compliance over the Procurement requirements we noted the following:
From review of 2 of the vendors paid with the Coronavirus State and Local Fiscal Recovery Fund
Program that were paid over $60,000 during the year, there was no evidence that the City went
through the proper required procurement process to select the vendors.
Criteria: Per 2 CFR sections 200.318 through 200.327, all procurement functions, including but not limited to
preparation of specifications, solicitation of sources, qualification or disqualification of sources, preparation
and award of contract and contract administration must be done for the vendors used for the federal
expenditures based off the City’s procurement policies and procedures.
Effect: The City violated its established procurement code and may not have obtained the best price for the
goods and services received during the year for the Coronavirus State and Local Fiscal Recovery Fund
Program.
Cause: There was management override and lack of proper training in CPO and accounts payable positions,
and therefore, the process was not properly followed during the fiscal year.
Auditors’ Recommendations: We recommend the City implement policies and procedures as soon as possible
to ensure compliance with procurement requirements pertain to each procurement that occurs during the
fiscal year and no payments are made through direct voucher.
Agency’s Response: Since taking office in fiscal year 2024, the current Finance Director has implemented a
Standard Operating Procedure (SOP) in alignment with the Procurement Policy adopted in 2022 to ensure
compliance with the State Procurement Code, internal controls, and the proper segregation of duties in
procurement. This SOP outlines the specific roles and responsibilities of the Certified Procurement Officer
(CPO), Finance Director, City Manager, and City Council when applicable in the procurement process.
In addition, a procurement workflow has been created to be utilized by the (CPO) to ensure compliance with
the City of Espanola’s procurement policy, the State Procurement Code, and appropriate checks and balances
at varying thresholds. The (CPO) is responsible for ensuring all policies and state procurement laws are
followed throughout the process. Additionally, all documentation from initiation to the issuance of a
Purchase Order (PO) is retained electronically in a complete packet for record-keeping and audit purposes.
In order to address direct payment voucher controls, the City has restricted the use of direct payment
vouchers for high-volume purchases. All procurements must follow the purchase order process, unless an
exception is authorized in accordance with policy. The finance department has also implemented issuing
procurement violations to any department head or staff who authorizes a purchase in the absence of an
approved purchase order, which aligns with the 2022 Adopted Procurement Policy. By enforcing these
measures, the City ensures procurement policy compliance, transparency, and financial accountability,
thereby addressing the audit findings and preventing future violations.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025