U.S. Dairy Export Council

2021-001 Federal Program Name: Market Access Program Federal Agency: U.S. Department of Agriculture (USDA) Federal Assistance Listing Title and Number: 10.601 Award Year: January 1, 2021 ? December 31, 2021 Criteria or Specific Requirement: Reporting Condition: Testing of the SF425 report identified an input error. (Deficiency) Questioned Costs: None. Context: Testing of the SF425 report identified an input error in the report filed. The total recipient share of expenditures was input as $14,797,251.80 whereas the actual value was $14,497,251.80. The Organization files one report for this program and this was the report tested. Effect: The recipient share of expenditures was reported inaccurately. Cause: The review of the report to be filed was not adequate to identify the error. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure adequate review of reports before they are filed. Views of Responsible Officials and Planned Corrective Action: U.S. Dairy Export Council and Affiliates agrees with the comment and had developed a plan to correct the finding.

Finding 2020-001 Information on the federal programs: Federal Grantor: United States Department of Agriculture Assistance Listing Nos.: 10.601, Market Access Program (MAP); and 10.618, Agricultural Trade Promotion Program (ATP) Federal Award Period: 1/1/20 ? 12/31/20 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR section 200.303 states, ?The non-Federal entity must: (a) 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).? Condition: Corrective action related to the prior year procurement, suspension and debarment internal control finding did not take place until the fourth quarter of fiscal year 2020. Internal controls were not in place for the period January 1, 2020 through September 30, 2020 and, therefore, internal controls were not tested for this period. We tested the operating effectiveness of internal controls put in place for the fourth quarter October 1, 2020 through December 31, 2020 for procurement, suspension and debarment and did not note any control deviations for procurement, suspension and debarment transactions sampled for this period. Cause: The U.S. Dairy Export Council Contracting Policy was not updated to fully address all aspects of the procurement standards of the Uniform Guidance 2 CFR section 200.320 until July 24, 2020. In addition, revised internal controls over procurement, suspension and debarment were not fully implemented until the fourth quarter of fiscal year 2020. Effect or potential effect: Procurement actions may not be documented in accordance with the procurement standards of 2 CFR section 200.320. Procurement transactions may be entered into that are not in compliance with the procurement standards of 2 CFR section 200.320 and, therefore, Federal funds may be used to pay a vendor that is suspended or debarred. Questioned costs: None. Context: MAP ? Procurement ? There were seven procurement vendors totaling $397,871, subject to the procurement control deficiency for the period January 1, 2020 through September 30, 2020, out of a total of 26 procurement vendors totaling $5,236,113 for fiscal year 2020. ? Suspension and debarment ? There were 15 vendors totaling $1,329,353, subject to the suspension and debarment control deficiency for the period January 1, 2020 through September 30, 2020, out of a total of 26 procurement vendors totaling $5,236,113 for fiscal year 2020. ATP ? Procurement ? There were two procurement vendors totaling $69,755, subject to the procurement control deficiency for the period January 1, 2020 through September 30, 2020, out of a total of 11 procurement vendors totaling $2,152,879 for fiscal year 2020. ? Suspension and debarment ? There were four vendors totaling $479,173, subject to the suspension and debarment control deficiency for the period January 1, 2020 through September 30, 2020, out of a total of 11 procurement vendors totaling $2,152,879 for fiscal year 2020. Total federal expenditures were $5,236,112 and $2,152,879 for Assistance Listing Nos. 10.601 and 10.618, respectively, for the year ended December 31, 2020. Identification as a repeat finding, if applicable: Finding 2020-001 is a repeat of finding 2019-001 from the prior year. Recommendation: Management at U.S. Dairy Export Council and Affiliates should continue to reinforce the importance of adhering to its procurement policy and provide specific training for all program personnel. Additionally, suspension and debarment searches should be performed in accordance with the procurement policy in effect and retained in the procurement files. Views of responsible officials: U.S. Dairy Export Council and Affiliates agrees with the comment and has developed a plan to correct the finding.

Finding 2020-002 Information on the federal programs: Federal Grantor: United States Department of Agriculture Assistance Listing Nos.: 10.601, Market Access Program (MAP); and 10.618, Agricultural Trade Promotion Program (ATP) Federal Award Period: 1/1/20 ? 12/31/20 Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, ?The non-Federal entity must: (a) 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).? Condition: During the review of the matching calculation performed by management, the portion of the matching calculation related to the total hours allocation used the incorrect total hours worked by the entity related to a specific grant program it participated in during the fiscal year. This total hours allocation represented one component of the matching calculation performed by management; no exceptions were noted related to any other applicable components of the matching calculation. Cause: Management?s review procedures were not sufficiently precise to identify that the hours allocation used in the matching calculation was incorrect. Effect or potential effect: Total matching expenditures related to the specific grant program were underreported as a result of the underallocation of hours worked by the entity related to the specific grant program during the fiscal year. The required match may not be met and identified by management in a timely manner. Questioned costs: None. Context: We obtained the current year matching calculation workbook and reperformed the review procedures as completed by management. During this reperformance, we noted that the total hours allocation calculation in the matching calculation workbook was linked to the incorrect cell on a supporting workbook, resulting in underallocating total hours worked relating to a specific grant program, which resulted in 7,785 underreported hours allocated to the specific grant program. This total hours allocation represented one component related to the review of the matching calculation performed by management, whereby no exceptions were noted related to any other applicable components. Identification as a repeat finding, if applicable: Finding 2020-002 is not a repeat finding. Recommendation: Management at U.S. Dairy Export Council and Affiliates should reinforce the importance of developing and executing sufficiently precise review controls related to the performance of the matching calculation workbook to ensure the completeness and accuracy of all relevant inputs as utilized by the matching calculation workbook. Views of responsible officials: U.S. Dairy Export Council and Affiliates agrees with the comment and has developed a plan to correct the finding.

Finding 2019-001 (Procurement, Suspension and Debarment) Information on the federal program: Federal Grantor: United States Department of Agriculture CFDA No.: 10.601, Market Access Program Federal Award Period: 1/1/19?12/31/19 Criteria or specific requirement (including statutory, regulatory, or other citation: Internal Control The Uniform Guidance 2 CFR Section 200.303 states, ?The non-Federal entity must: (a) 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).? Procurement The Uniform Guidance 2 CFR Section 200.320 states, ?(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.? The Uniform Guidance 2 CFR Section 200.320(f) states, ?Procurements by noncompetitive proposals. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: (1) The item is available only from a single source; (2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (3) The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or (4) After solicitation of a number of sources, competition is determined inadequate.? U.S. Dairy Export Council Contracting Policy Section VII. Development of a Contract states, ?In general, a USDEC contract follows a standard template to which the accepted proposal is attached as an addendum. There is one type of Standard Agreement for all USDEC contracts ? a ?standard? agreement is used to contract vendors or consultants whose payments will exceed $10,000 for the year.? Suspension and Debarment The Uniform Guidance 2 CFR Section 200.213 states, ?Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.? Condition: We noted the following six exceptions related to procurement, suspension, and debarment: ? For two procurement actions falling within Uniform Guidance small purchase procedures but less than U.S. Dairy Export Council and Affiliate?s competitive bidding procedures (greater than $3,500 but less than $30,000), U.S. Dairy Export Council and Affiliate did not obtain price or rate quotations from an adequate number of qualified sources or document why such price or rate quotations were not required. ? For two procurement actions falling within U.S. Dairy Export Council and Affiliate?s competitive bidding threshold (greater than $30,000), management did not adequately document its rationale on the contract summary form why a competitive bid was not required. ? For two vendors paid with federal funds, U.S. Dairy Export Council and Affiliate did not perform a suspension and debarment search before payment was made to the vendor. Cause: The U.S. Dairy Export Council Contracting Policy in effect during fiscal year 2019 did not fully address all aspects of the Uniform Guidance procurement requirements. Effect or potential effect: Procurement actions are not documented in accordance with Uniform Guidance procurement standards. Procurement transactions may be entered into that are not in compliance with Uniform Guidance standards. Federal funds may be used to pay a vendor that is suspended or debarred. Questioned costs: $120,489 ? CFDA #10.601. Questioned costs represent the expenditures reported in the schedule of expenditures of federal awards for the year ended December 31, 2019, related to the six vendors outlined above. Context: We selected a sample of 14 procurement actions totaling $3,498,225 in current year federal expenditures out of a population of 26 procurement actions totaling $4,619,270 in current year federal expenditures for the year ended December 31, 2019, for purposes of testing procurement compliance requirements. Four of the 14 procurement actions (totaling $102,989 in current year federal expenditures) had exceptions related to procurement documentation as described under ?Condition.? In addition, we selected a sample of 19 vendors totaling $3,539,488 in current year federal expenditures out of a population of 67 vendors totaling $5,195,666 in current year federal expenditures for the year ended December 31, 2019, for purposes of testing suspension and debarment compliance requirements. Two of the 19 vendors (totaling $17.500 in current year federal expenditures) had exceptions related to suspension and debarment documentation as described under ?Condition.? Total federal expenditures for the major federal program were $5,352,930. Identification as a repeat finding, if applicable: Finding 2019-001 is not a repeat finding. Recommendation: U.S. Dairy Export Council and Affiliate should ensure that updates made to the contracting policy in fiscal year 2020 are being followed for future procurement actions and that the appropriate documentation is being retained in accordance with Uniform Guidance procurement, suspension, and debarment requirements. Views of responsible officials: U.S. Dairy Export Council and Affiliate agree with the comment and have developed a plan to correct the finding.

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