Finding 560523 (2024-001)

Finding 2024-001 – Procurement Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No.: No. 21.027 Federal Award Number: ASST_NON_SLFRP0137_2001 Grant Award Period: 9/1/2022 – 8/31/2024 Pass Through Entity: Los Angeles County - Department of Public Health Repeat Finding – No Statistically Valid Sample – The sample was not intended to be, and was not, a statistically valid sample Criteria 2 CFR 200.324 requires that the non-federal entity perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-federal entity must make independent estimates before receiving bids or proposals. 2 CFR 200.303 requires the recipient of federal funds 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. Condition/Context For both of the samples selected for testing which had related procurements above the California Community Foundation’s (the Foundation's) Simplified Acquisition Threshold, there was no support evidencing a cost or price analysis performed by management before receiving the corresponding proposals, although multiple bids were received as part of these procurements. Cause Although the Foundation included the requirement in its procurement policies that the cost or price analysis needed to be performed before bids or proposals are received the Foundation did not have sufficient controls in place to ensure that a cost or price analysis is performed prior to receiving bids or proposals. Effect Because the Foundation was not in compliance with one of the procurement requirements this could result in disallowed costs if procurement amounts aren't considered reasonable. The Foundation did, however, receive multiple bids as part of the procurement process for each of the samples noted above to demonstrate the costs claimed for reimbursement under the contract were reasonable and under the budget provided to the Foundation by the passthrough awarding entity. Questioned Costs None noted. Auditors’ Recommendation We recommend that the Foundation strengthen processes and internal controls to ensure that a cost or price analysis is performed, reviewed, and substantiated with formal documentation prior to receiving bids or proposals for all procurement actions above the Simplified Acquisition Threshold. Views of Responsible Officials The Foundation acknowledges the finding and will enhance compliance with federal procurement standards by reinforcing staff training on cost and price analysis requirements, strengthening internal oversight mechanisms, and implementing a formalized process to ensure proper documentation is completed and retained. Periodic reviews and audits will verify adherence to these standards and maintain consistent implementation.