Finding Text
Department of Treasury, State of Iowa Department of Management, Federal Financial Assistance Listing 21.029, 526659
Coronavirus Capital Projects Fund
Procurement, Suspension & Debarment
Material Weakness in Internal Control over Compliance and Material Noncompliance
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 the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327.
2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parities that are debarred, suspended, or excluded from ineligible
participation in Federal assistance programs or activities.
Condition: Testing of the federal program identified the following:
• The Cooperative’s formally documented procurement policy was missing one required element as it relates to the methods of procurement.
• One instance where the Cooperative followed a bid process, however, the documentation was not retained to support the selection. Additionally, the contract with the vendor was missing required contract provisions in accordance with Uniform Guidance.
• One instance where the Cooperative did not follow the procurement process as detailed in the procurement policy and did not have any formal documentation or contract in place with the vendor.
• Two instances where the Cooperative entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred.
Cause: Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment.
Effect: Ineffective controls over this are of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Additionally, the cooperative may enter into a covered transaction with a vendor that is suspended or debarred.
Questioned Costs: None reported.
Context/Sampling: A nonstatistical sample of 2 out of 4 vendors were selected for testing.
Repeat Finding form Prior Year: No
Recommendation: We recommend the Cooperative update their procurement policy to ensure it includes the required elements as it relates to the methods of procurement. In addition, we suggest that management implement procedures and control processes related to the review of contracts to ensure the procurement methods are being followed as it relates to covered transactions and those contracts include the required Uniform Guidance provisions. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government.
Views of Responsible Officials: Management agrees with the finding.