Finding 961223 (2023-003)

2023-003 – UNIFORM GUIDANCE WRITTEN POLICIES AND PROCEDURES Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards, (G) Instance of Non-compliance related to Federal Awards, and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition During the audit, we noted the Authority’s policies and procedures required updates to conform with Uniform Guidance. Criteria Uniform Guidance requires that procedures are documented related to cash management, cost allowability, procurement, and conflict of interest provisions. Cash Management 2 C.F.R. Part 200, §200.302(b)(6) “Written procedures to implement the requirements of §200.305 Payment.” • Written procedures should answer questions such as: who determines that the cash management procedures are being followed; how the procedures are followed; when the steps are performed; what is being verified. A subrecipient’s Cash Management written procedures must address both advance payments and cost reimbursement. The written procedures should include steps involved in the obligating, liquidating, and claiming of federal funds. Allowable Costs 2 C.F.R. Part 200, §200.302(b)(7) “Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.” • Written procedures on Allowable Costs must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance. Conflict of Interest 2 C.F.R. Part 200, §200.318(c)(1) “The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts.” • Written procedures such as required per 2 C.F.R. Part 200, §200.318 should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step-by-step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions like: what is considered a conflict of interest; how is it determined that an employee has a conflict of interest, how it is determined the procedures are followed; when the steps are performed; what is being verified. Procurement CFR 2, § 200.318(a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Cause The Authority has not previously required a single audit under Uniform Guidance. As a result, the Authority’s policies and procedures have not been updated to include the required language. Effect The Authority is noncompliant with the requirements of Uniform Guidance, which could result in future findings. Recommendation We recommend that the Authority review their current policies and procedures and bring them up to date with the appropriate language as required per Uniform Guidance. Adding the language will ensure that the Authority is always in compliance when single audits are required. Management Response CRRUA has not previously required a single audit under Uniform Guidance, CRRUA will work with DAC Grant and Accounting team, who assist in oversight per contract agreement, to develop written procedures and policies per Uniform Guidance requirements. In addition, CRRUA will enlist external assistance for additional review and recommendations regarding the drafted policies and procedures. Finding resolved timeline: Implemented by June 30, 2024. In the next 3 months CRRUA will implement policies and procedures required to conform with Uniform Guidance. Designation of employee position responsible for meeting this deadline: Office Manager