Montgomery County Chamber of Commerce, Inc.Non-Profit

Finding 2024-001: Incorrect Use of Sole Source Justification Information on the Federal Program: 59.059 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200.320, paragraph 318 “General procurement standards” states noncompetitive (sole source) procurement is allowed only under the following circumstances: - The item is available only from a single source. - There is an exigent or emergency situation that will not permit delay. - The Federal awarding agency or pass-through entity expressly authorizes noncompetitive procurement in writing. - After soliciting multiple sources, competition is deemed inadequate. These rules are designed to ensure open and fair competition in Federal procurement. Condition: MCCC and Affiliate procured goods/services using sole source justification without meeting the required criteria. Specifically, the procurement records did not document why the procurement met one of the allowed exceptions under Uniform Guidance, and competitive procurement methods were not utilized when they should have been. Cause: The Organization did not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to, and thus, there lies the potential that MCCC and Affiliate will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Failure to perform the proper procurement procedures could result in disallowance of Federal expenditures based on lack of fair competition. Questioned Costs: None noted. Context: 1 out of 1 samples tested did not follow the specific criteria for noncompetitive procurement. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend MCCC and Affiliate provide training to staff on the specific requirements of 2 CFR 200.320 to ensure that they are aware of the conditions under which sole source procurement is allowable.

Finding 2024-002: Timesheets and Payroll Registers Information on the Federal Program: 59.059 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 “Compensation – personal services” requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: We noted 4 instances of timesheets that had no supervisory review and approval. We also noted 5 pay periods where payroll registers had no supervisory review and approval. Cause: The Organization’s current policies require both the employee and supervisor to sign the timesheet. Throughout the year, these policies were not followed, or were not followed consistently by the Organization employees, and management failed to adequately enforce its policies. Effect or Potential Effect: The Organization could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: None noted. Context: 4 out of 21 samples tested did not have documented review or approval of timesheets and 5 out of 21 payroll registers tested did not have documented review or approval. Our audit work in this area consisted of a random sample selection of payroll periods and employees. We consider our sample to be representative of the population, and thus, is a statistically valid sample. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend that the Organization strengthen its internal controls by ensuring that all timesheets are reviewed and approved by the employees' direct supervisors before being submitted for payroll processing. Additionally, we recommend that the payroll register be reviewed and approved by an appropriate individual (e.g., the finance manager or another supervisory official) to ensure that payroll costs charged to the Federal award are accurate and complete. A formal policy should be adopted, and monitoring procedures should be implemented to ensure compliance with Federal regulations for time and effort reporting.