The Elwyn Foundation and Subsidiaries

2023-001 – Procurement and Suspension and Debarment Information on Federal Program Federal Grantor: U.S. Department of Education Pass-through Grantor: Pennsylvania Department of Education Program: Early Intervention (Philadelphia), Early Intervention (Chester) Assistance Listing #: 84.027, 84.173 Title: Special Education Cluster (IDEA) Audit Period: 07/01/2022 – 06/30/2023 Passthrough Numbers: 232-210026, 231-210026, 232-210035, 231-210035 Criteria or Specific Requirement - Procurement guidance is located in sections 2 CFR 200.317-200.326 of Uniform Guidance focusing on increased competition and transparency in the procurement process. There are five general procurement standards covering the purchase of property, supplies and services under the Uniform Guidance as follows: (a) Costs must be reasonable and necessary, (b) must provide for full and open competition, (c) an organization must maintain written standards of conduct covering internal and external conflicts of interest, and (d) the organization must maintain documentation addressing cost and price analysis and vendor selections where applicable based on the method of procurement used. The non-Federal entity must use one of the following methods of procurement: (a) micro-purchases, (b) small purchases, (c) sealed bids, (d) competitive proposals or (e) sole source. Condition - We noted for all of the eight procurements sampled, Elwyn did not provide a contemporaneously documented written conclusion on the method of each procurement that either demonstrated the procurements were conducted in a manner that provided full and open competition, or documented why noncompetitive procurement was appropriate. Elwyn provided their rationale for each of the procurements as part of the audit sample and testing process. Cause - Policies and procedures were not appropriately adhered to sufficiently document rationale and to ensure that procurement method selected was supported. Effect or Potential Effect - Written documentation insufficiently detailing the method and conclusions involved in procurement decisions, impacts the ability to demonstrate that full and open competition occurred, or that noncompetitive procurement was appropriate. Questioned Costs - None Context - We tested a sample of eight procurement transactions and noted that the Organization did not maintain contemporaneously written documentation and conclusions as required by its procurement policy for the selected items. Repeat Finding - No Recommendation - We recommend Elwyn enforce its existing policy and procedures to ensure compliance with procurement requirements. Elwyn should provide targeted training to members of the Organization involved in procurement processes on its existing policy and procedures to ensure understanding of the Organization’s requirements for documentation of procurement methods. Additionally, Elwyn should ensure all procurement decisions are contemporaneously documented with the information necessary to conclude on appropriateness of the procurement with respect to the procurement policy and requirements. Views of Responsible Officials - Management agrees with the finding and recommendation set forth within and has developed a corrective action plan to address the lapses in internal control.

III. Findings and Questioned Costs Related to Federal Awards 2020-001 - Activities Allowed or Unallowed; Allowable Costs/Cost Principles Information on Federal Program - Special Education Grants for States (IDEA, Part B), CFDA #84.027, June 30, 2020 Award Year, U.S. Department of Education, Philadelphia School District Criteria or Specific Requirement ? The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented. Elwyn operates a 20-day summer program at its Davidson School. In accordance with the contract between Elwyn and the Philadelphia School District, Elwyn can bill the Philadelphia School District for the full 20-days of the program if a student is in attendance for at least 10 days. Condition ? During our testing of disbursements, we noted the following exceptions: ? For one of the 40 expenditures selected for our sample, one student was double billed to the contact for the full 20-day program rate. ? For one of the 40 expenditures selected for our sample, one student only attended 5 days of the program, however, the contract was billed the for the full 20-day program rate. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that the Organization?s internal control review process prevented and/or detected overbilling of the contract. Effect or Potential Effect ? For the year ended June 30, 2020, the contract was overbilled by approximately $9,200. Context ? We tested a sample of 40 items which amounted to approximately $254,000 and found two exceptions as noted in the condition. The two exceptions indicated approximately $9,200 was overbilled to the contract. The total program population was 109 items which amounted to approximately $677,000. Recommendation - We recommend that the Organization ensure its policies and procedures are followed consistently such that census data is accurately billed to the contract. Views of Responsible Officials ? Management agrees with the finding and recommendation set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in internal control.