Finding 584385 (2023-005)

Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID‐19 Testing and Mitigation for Rural Health Clinics Procurement, Suspension, and 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 federal awards that provides reasonable assurance that the Health System is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non‐Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. Condition: The Health System did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro‐purchase threshold. In addition, Health System did not have a written procurement policy or written standards of conduct policy related to procurement. Cause: The Health System did not have a procurement policy in place. Effect: Without obtaining multiple quotes and having a procurement policy or standards of conduct policy related to procurement, demonstrating that the Health System complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: Covered transactions entered into by the Health System over the micro‐purchase threshold without multiple quotes totaled $147,460. Questioned costs are unable to be identified as multiple quotes were not received by the Health System to ensure the price paid was reasonable. Context: Sampling was not used as only three vendors had purchases over $10,000. Repeat Finding from Prior Years: No Recommendation: We recommend the Health System implement a procurement policy and standards of conduct policy related to procurement, implement internal control processes to ensure compliance with their procurement policy, and retain documentation to support procurement, suspension and debarment procedures performed. Views of Responsible Officials: Management agrees with the finding.