THE CHILDREN'S HOSPITAL OF ALABAMANon-Profit

FINDING 2025-001 Significant Deficiency in Internal Controls over Compliance and Noncompliance – Procurement, Suspension and Debarment Federal Agency: U.S. Department of Health and Human Services Pass-through Grantor: Alabama Department of Mental Health Federal Program: Maternal and Child Health Federal Consolidated Programs ALN: 93.110 Criteria: In accordance with 2 CFR 200.320 paragraph (a)(2), informal procurement methods are required when the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. Condition/Context: For the three selected vendors, it was determined based on vendor expenditures that the Company should have followed federal guidance for informal procurement methods for simplified acquisitions. During procurement testing, it was determined that the Company did not consistently retain documentation to support that vendors were selected in accordance with federal guidance for informal procurement methods for simplified acquisitions whereby price or rate quotations must be obtained from an adequate number of qualified vendors. Cause: Due to the infrequency of entering into contracts above the micro-purchase threshold, management followed the Company’s existing procurement policy which does not include procedures or guidance for procurement of vendors under federal awards. Effect: Grant funded contracts could be awarded to vendors that are less cost effective, which would be in violation of federal regulations and may result in early termination of the grant award, non-reimbursement of grant funding, or cessation of future funding. Questioned Costs: None. Recommendation: Management should enhance the Company’s procurement policies for grant-funded purchases to align with federal procurement guidance. Repeat Finding: No. Views of Responsible Officials: See Corrective Action Plan.