Memorial Sloan Kettering Cancer CenterNon-Profit

Section II – Financial Statement Findings There are no matters that are required to be reported. Section III – Federal Award Findings and Questioned Costs Finding 2023-001 – Procurement and Suspension and Debarment Identification of the Federal Program: Grantor: Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing No.: Various Criteria or specific requirement: In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Title 2, Subtitle A, Chapter II, Part 200, Subpart D 200.320(a)(2) Small purchases, “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: Management has an established procurement and suspension and debarment policy to monitor procurement requirements. However, management did not have an effective control in place to retain documentation supporting the performance of these procedures for certain small purchases. Cause: For certain vendors, the Institution has long established contracts for which management did not maintain evidence for recent evaluation of price or rate quotations as required. Effect or potential effect: The lack of an effective control has the potential to result in noncompliance. Questioned costs Questioned costs of $313,028 were identified, representing small purchases for which documentation was not retained to support that price or rate quotations were obtained. Context In a sample of 30 small-purchase procurement transactions, 16 selections (totaling $313,028) did not have evidence of the Institution obtaining price or rate quotations in accordance with the small purchase requirements. Management informed us that, for these purchases, goods were procured from vendors with existing contracts. However, documentation to support that price or rate quotations were obtained could not be provided. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: The Institution revised its procurement policy in 2024 to further detail the requirements of 2 CFR sections 317 – 326 and should ensure that it appropriately follows the necessary provisions, including the requirements to retain price and rate quotations for small purchases. Views of Responsible Officials: As responsible officials of the supply chain organization, we understand the above finding is a result of not being able to produce the required price analysis, quotes and/or bid documentation for certain contracts that we utilize federal funds for purchasing of goods and services. We take this finding very seriously and will ensure the required controls and processes, as found in our updated enterprise procurement policy, be implemented to ensure best procurement practices are being enforced within our organization as it relates to federal funds purchases. The Institution agrees with the findings and will implement a corrective action that includes maintaining an explicit number, 2 or more quotation or sole source documentation for purchases that meet the small purchase threshold.