CITY OF PALOS HEIGHTSLocal Government

FINDING 2020-002 ? ACTIVITIES ALLOWED OR UNALLOWED CFDA NUMBER 21.016 PROGRAM TITLE Equitable Sharing Program DEPARTMENT U.S. Department of Treasury AWARD YEAR 2020 Criteria: According to the Guide to Equitable Sharing for State, Local, and Tribal Law Enforcement Agencies, equitable shared funds must be used in accordance with the guide for law enforcement purposes that directly supplement the appropriated resources of the recipient law enforcement agency. Equitable shared funds are subject to the provisions of the Code of Federal Regulations (CFR) and must be used in a reasonable and necessary manner and not create the appearance of waste or extravagance. Condition: During our testing, we noted 5 out of the 40 disbursements selected for testing were not for activities allowed under program requirements. The 5 disbursements were paid to officers upon their passing of the Peace Officer Wellness Evaluation (POWER) test and were to be used for a credit to be redeemed for merchandise related to physical fitness. Per program requirements for uses of funds, this is unallowed. Questioned Costs: The total amount of disbursements that were deemed not allowed resulted in costs of $1,125. Context: Out of a sample of 40, there were 5 instances where activities were not allowed under program guidance. Effect: Noncompliance with program requirements could result in loss of future shared equity funding. Cause: This was due to an oversight and misrepresentation of the guidance in which the Police Department initially thought the costs were allowed under program guidance. Recommendation: We recommended that the City and Police Department implement procedures to ensure disbursements spent with equitable sharing funds are for allowable costs. We recommend having a review in place after a cost has gone through initial review and approval to ensure the cost meets program requirements. Management's Response: Management agrees with this finding. See Corrective Action Plan.

FINDING 2020-003 ? PROCUREMENT POLICY CFDA NUMBER 21.016 PROGRAM TITLE Equitable Sharing Program DEPARTMENT U.S. Department of Treasury AWARD YEAR 2020 Criteria: Per 2 CFR section 200.318, non-Federal entities must have and use documented procurement procedures, consistent with State, Local, and tribal laws and regulations, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity?s documented procurement procedures must conform to the procurement standards identified in 2 CFR sections 200.317 through 200.327. Condition: The City's procurement policy does not include the essential elements as outlined in 2 CFR sections 200.317 through 200.327 set forth within the Uniform Guidance. Questioned Costs: None Context: There was an absence of certain Uniform Guidance elements within the City?s procurement policy. Effect: With the absence of a compliant policy, the City is at risk for noncompliance with other Federal programs as it relates to Federal procurement. Cause: The City was unaware of the Uniform Guidance requirements for procurement and written policies and procedures. Recommendation: The City should update their current procurement policy to be in line with current Uniform Guidance Standards set forth in 2 CFR sections 200.317 through 200.327. Management's Response: Management agrees with this finding. See Corrective Action Plan.

FINDING 2020-004 ? PROCUREMENT ? BID PROCESS CFDA NUMBER 21.016 PROGRAM TITLE Equitable Sharing Program DEPARTMENT U.S Department of Treasury AWARD YEAR 2020 Criteria: Per 2 CFR section 200.320, the Non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR sections 200.317 ? 200.319 for any methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Per 2 CFR section 200.320(c), there are specific circumstances in which noncompetitive procurement can be used. Condition: During our testing, we noted 10 out of 40 items selected were required to go through the formal bidding process but did not due to the nature of the items. It was determined these items were noncompetitive procurement items due to their nature, however, they were not appropriately documented as to why they were noncompetitive in nature and why they did not go through the formal bidding process. Questioned Costs: None Context: Out of a sample of 40, there were 10 items that were not properly documented as to why there was not a competitive bid. Effect: With the absence of a documented procurement decision, the City is at risk for noncompliance with other Federal programs as it relates to Federal procurement. Cause: The City was unaware of the Uniform Guidance requirements for procurement and written policies and procedures. Recommendation: The Police Department should document as to why an item, above the formal bidding threshold, is not required to go through a bidding process and document why it is determined to be a noncompetitive procurement item. Management's Response: Management agrees with this finding. See Corrective Action Plan.

FINDING 2020-005 ? SUSPENSION AND DEBARMENT CFDA NUMBER 21.016 PROGRAM TITLE Equitable Sharing Program DEPARTMENT U.S. Department of Treasury AWARD YEAR 2020 Criteria: Per 2 CFR Section 180.300, when a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) exclusions, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition: During the course of our testing, we noted the City and Police Department did not perform procedures over suspension and debarment before entering into a covered transaction. Questioned Costs: None Context: There was an absence of documentation in determining if vendors were suspended or debarred. Effect: With the absence of a procedure and policy around suspension and debarment, the City could be entering into transactions with ineligible vendors. Cause: The City was unaware of the Uniform Guidance requirements for procurement and written policies and procedures. Recommendation: The City should establish written procedures for suspension and debarment and follow said procedures prior to entering into agreements and maintain the documentation for the required retention period. The City and Police Department should retain documentation to support the search of vendors on SAM?s system of debarment and suspension listing. Management's Response: Management agrees with this finding. See Corrective Action Plan.