ST BERNARD PARISH GOVERMENTLocal Government

Finding 2024-004 Material Weakness in Internal Control Over Compliance and Noncompliance – Procurement, Suspension and Debarment Federal Agency: Department of the Interior Federal Program: 15.435 Gulf of Mexico Security Act of 2006 (GoMESA) Compliance Requirement: I – Procurement and Suspension & Debarment Criteria: The Uniform Guidance regulations (§200.320) require that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive, and non-competitive proposals. In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering items identified in Appendix II of Part 200 of the Uniform Guidance, as applicable. Additionally, §200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. Condition: During our testing of purchases under the procurement regulations, for 1 out of 2 vendors (paid approximately $156 thousand from the amount tested of $1.62 million) selected for testing, the Parish was unable to provide supporting documentation that these vendor services were procured in accordance with the standards in §200.320. Cause: The Parish does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the Parish’s consideration and/or conclusion for obtaining and awarding contracts based on sealed bid, competitive, and non-competitive proposals. Additionally, written policies and procedures for procurement were not followed to ensure all requirements under these regulations were addressed. Effect: The Parish may not be selecting vendors with the lowest overall cost for services procured or paid with federal grant funds. Perspective: The condition noted does not indicate a pervasive or entity-wide control deficiency but is specific to this program and the related compliance requirement for Procurement and Suspension & Debarment. Questioned Costs: $156,321 Recommendation: We recommend the Parish implement internal controls to ensure that supporting documentation is maintained for the procurement of services, and review of suspension and debarment in accordance with Uniform Guidance §200.320. Additionally, we recommend the Parish enhance its written policies and procedures to ensure compliance with federal procurement requirements. View of Responsible Official: See corrective action plan.

Criteria: The Uniform Guidance regulations (§200.320) require that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive, and non-competitive proposals. In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering items identified in Appendix II of Part 200 of the Uniform Guidance, as applicable. Additionally, §200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. Condition: During our testing of purchases under the procurement regulations, for 4 out of 5 vendors (paid approximately $2.12 million from the amount tested of $2.22 million) selected for testing, the Parish was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in §200.320. The universe (population) from which the items were selected included all vendor payments in 2023 over the scope amount of $133,000, consisting of 7 vendors paid approximately $2.3 million. Questioned Costs: Approximately $2.12 million. Cause: A material weakness exists in the internal controls over procurement. The Parish does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the Parish’s consideration and/or conclusion for obtaining and awarding contracts based on sealed bid, competitive, and non-competitive proposals. Additionally, written policies and procedures for procurement were not followed to ensure all requirements under these regulations were addressed. Effect: The Parish may not be selecting vendors with the lowest overall cost for services and supplies procured or paid with federal grant funds. Recommendation: We recommend the Parish implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with Uniform Guidance §200.320. Additionally, we recommend the Parish enhance its written policies and procedures to ensure compliance with federal procurement requirements. View of Responsible Official: See the corrective action plan provided by the Parish.

Criteria: Requirements of eligibility for the Section 8 Housing Choice Vouchers include certain eligibility criteria that must be met by applicants to the program. The public housing authority (the Parish) verifies a family’s eligibility (including income eligibility) as part of the acceptance process into the program. Condition: Upon review and verification of an applicant’s income eligibility, it was determined by the Parish that the applicant did not meet income eligibility thresholds set by the Parish, which are more restrictive than the federal income eligibility requirements. Upon interviewing staff, it was discovered that the former Housing Coordinator instructed an employee to exclude the applicant’s bonus from consideration when determining the applicant’s income. As a result of this override of controls, the individual received benefits even though they did not meet the Parish’s requirements. The individual did meet the federal requirements. Questioned Costs: Unknown. Cause: A significant deficiency exists in the internal controls over income eligibility determination, including consideration of management override of controls. Effect: While the applicant in this instance met the federal Section 8 program’s eligibility criteria, there is potential that ineligible applicants have and will be approved by the Parish without further action to address this issue. Recommendation: The Parish should review its policies and procedures in place to ensure that appropriate factors are being considered in income eligibility determination. View of Responsible Official: See the corrective action plan provided by the Parish.

Criteria: The Parish, as a public housing authority, is required to enter into depository agreements with their financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third party rights to HUD. (24 CFR section 982.156) Condition: The Parish did not have the required depository agreements in place during 2023. Questioned Costs: None. Cause: The Parish’s experienced personnel changes in the Director of Finance and Director of Housing positions in recent years (2021 through 2023). Effect: Due to lack of oversight of this requirement, the Parish’s former depository agreement lapsed in 2021. Recommendation: The Parish should review policies and procedures in place to ensure appropriate oversight and review of all HUD compliance requirements, including the requirement related to depository agreements. The Parish should execute a depository agreement with its financial institution immediately. View of Responsible Official: See the corrective action plan provided by the Parish.

Criteria: The Uniform Guidance regulations (§200.320) require, among other things, that procurement for purchases of goods and services follow certain procedures related to obtaining and awarding of contracts based on sealed bid, competitive-, and non-competitive proposals. Additionally, §200.318(d) provides that written policies and procedures must document the avoidance of the acquisition of unnecessary or duplicative items. Condition: During our testing of purchases under the procurement regulations, for 3 out of 11 vendors (paid approximately $2.86 million out of the amount tested of $3.45 million) selected for testing, the Parish was unable to provide supporting documentation that these vendor services or supplies were procured in accordance with the standards in §200.320. The universe (population) from which the items were selected was all vendor payments in 2022 over scope ($205,000 for GoMESA and $77,000 for CSLFRF) consisting of 14 vendors paid approximately $5.7 million. Questioned Costs: Unknown. Cause: A material weakness exists in the internal controls over procurement. The Parish does not have adequate controls in place to ensure that appropriate supporting documentation is maintained for purchases made under the procurement standards to support the Parish’s consideration and/or conclusion for obtaining and awarding of contracts based on sealed bid, competitive, and noncompetitive proposals. Additionally, written policies and procedures for procurement were not reviewed to ensure all requirements under these regulations were addressed. Effect: The Parish may not be receiving the overall lowest cost for services and supplies procured by the Parish. Recommendation: We recommend the Parish implement internal controls to ensure that supporting documentation is maintained for the procurement of goods and services in accordance with §200.320. Additionally, we recommend the Parish enhance its written policies and procedures to ensure compliance with federal procurement requirements. View of Responsible Official: The Parish will review the policies and procedures to ensure that proper internal controls are in place and the Parish will emphasize federal procurement guidelines.

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