U.S. HIDE, SKIN AND LEATHER ASSOCIATIONNon-Profit

Finding 2019-001: Suspension and Debarment Information on the Federal Programs: All Criteria or Specific Requirement: Recipients of Federal funding must adhere to specific requirements on screening all potential vendors, suppliers, contractors, subrecipients, employees, fellows, etc. to ensure the organization is not conducting business with excluded parties (as defined by the United States Government). This screening process must also be documented in writing. Condition: Although it is our understanding that USHSLA screened contractors in following with their policy, we were unable to verify that this screening was performed, because documentation was not maintained. Questioned Costs: Undetermined Context: Our audit procedures consisted of statistical sampling as well as substantive testwork over various samples of expenditures, and were deemed to be representative of the population for the fiscal year under audit. We determined that the issue was systemic in nature. Effect: Failure to screen potential vendors, suppliers, contractors, subrecipients, employees, fellows, etc. against the suspended and debarred list increases the possibility that Federal funds may inadvertently be provided to parties deemed to be excluded by the United States Government. Cause: Although USHSLA was screening contractors in accordance with policy, the screening was not documented. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that the screening of potential vendors and suppliers be completed (and documented) prior to entering into the transactions or making payments, and should be periodically revisited (and documentation updated) for ongoing relationships with parties.

Finding 2019-002: Compliance with Procurement Policies and Procedures Information on the Federal Programs: 10.618, 10.601 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with USHSLA policy and MAP regulations (?1485.17 (c)(7); ?1485.29 and MAP program notice 13?002), contracts with an annual value of $35,000 or more are subject to procurement procedures.Condition: We noted an instance where although we were provided a memo of explanation for a purchasing decision (generated during the audit), formal procurement procedures had not been followed. We also noted an instance where although USHSLA's policies require significant contracts to be rebid every three years, this was not done because of an exemption permitted by the Federal agency. We also noted an instance where a contract was signed for $34,000, just below USHSLA's threshold triggering procurement procedures. Questioned Costs: Undetermined Context: Our audit procedures consisted of statistical sampling as well as substantive testwork over various samples of expenditures, and were deemed to be representative of the population for the fiscal year under audit. Effect: If procurement policies are not followed, there is a risk that USHSLA will not perform proper evaluation of each element of cost to determine reasonableness. Cause: There were instances where USHSLA did not follow its procurement policies. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend all procurement records for purchases in excess of the purchase threshold include the following, at a minimum: (a) basis for contractor/goods selection or (b) justification for lack of competition when competitive bids or offers are not obtained, keeping in mind that sole source justification is only applicable under very limited, specific circumstances. Additionally, the conclusion should be clearly documented and accompany the procurement documentation. We also recommend that USHSLA update its procurement policies to include any specific exemptions permitted by Federal agencies that it wants to incorporate.