Finding 957650 (2023-002)

U.S. Department of Housing and Urban Development Federal Financial Assistance Listing 14.231 Covid-19 Emergency Solutions Grant Program – #23-DWS-0409; #72-5-23-4428 Procurement and Suspension and Debarment Significant Deficiency 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 Organization is managing the federal award in compliance with federal statutes regulations, and conditions of the federal award. Condition: In connection with the audit procedures performed, it was noted that the Organization did not adequately maintain complete procurement file documentation (as required by 2 CFR 200.318) related to one vendor that was selected for testing. Cause: The Organization did not have adequate internal controls in place to ensure that all vendor purchases/contracts include approved documentation of the required elements. Effect: There is an increased risk of noncompliance when internal controls are not adequately established, followed, and documented related to the procurement and suspension and debarment compliance requirement. Questioned Costs: None reported. Context/Sampling: Nonstatistical sampling was used for this compliance requirement. Sample size was 3 of 6 vendors (that exceeded the micro-purchase threshold for this program) totaling $97,732 out of $101,595 federal expenditures. For one vendor selected and tested, which had an immaterial amount (totaling $13,360) of federal expenditures for the major federal program tested, it was noted that complete internal controls and documentation related to this compliance requirement were not adequately documented. Repeat Finding from Prior Year: No Recommendation: The Organization should improve its processes and controls for: identifying vendors that meet the criteria of the Organization’s procurement policy, and documenting a procurement file (for each such vendor) that includes the required information and approvals. Views of Responsible Officials: Management agrees with this finding.