Billings Clinic

Finding: Equipment Management Program: Maternal and Child Health Federal Consolidated Programs Assistance Listing Number: 93.110 Criteria: OMB Circular A-110 and 2 CFR 200.313 (c) through (e) require equipment records be maintained to include identification numbers, source of funding, location and condition of property; a physical inventory of equipment shall be taken at least once every two years and reconciled to the equipment records, an appropriate control system shall be used to safeguard equipment, and equipment shall be adequately maintained. Condition: We noted the following conditions in our testing of equipment management: a) Equipment records were not maintained in accordance to 2 CFR 200.313, in which equipment is not identifiable with serial numbers or tags. b) Internal controls were not in place to safeguard equipment at various locations. Questioned Costs: None. Context: Total equipment purchased in fiscal year 23 are in accordance with grant, however, testing was not possible to be performed as equipment records did not include tag numbers to identify individual equipment at the various locations. A manual listing was created by the grant manager during the audit that agreed to purchase records. Equipment was not capitalized within the general ledger system but rather expensed, as such, system records did not exist. Effect: Not being able to produce a comprehensive and complete listing of assets purchased with federal funds, not properly tagging assets and not implementing internal controls to safeguard assets increase the risk of loss of assets purchased with federal funds and prevents them from being adequately tracked and maintained. In addition, the potential of noncompliance with the rules and regulations surrounding disposition of assets increases if the assets have been improperly disposed. Identification as a repeat finding: Not applicable. Recommendation: We recommend the Organization tags all equipment as soon as possible and perform a physical inventory count in order to create a complete equipment listing within its asset management system. In addition, we advise for the client to create an agreement between Organization and location/holder of property that clarifies ownership as well as compliance requirements for equipment purchased with federal funds with respect to safeguarding and maintaining such equipment. We also recommend for the Organization to establish an equipment policy and train individuals receiving grants in the requirements associated with equipment management and federal compliance requirements. Views of responsible officials: The Organization agrees with the finding. See separate report for planned corrective actions.

Finding: Suspension and Debarment Program: Maternal and Child Health Federal Consolidated Programs CFDA Number: 93.110 Passed-through Montana Department of Public Health and Human Services Criteria: General suspension and debarment standards outlined in 2 CFR 200.312 state that non-federal entities and contractors are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Condition: Two (2) instances amounting to a total of $113,127 were noted whereby a debarment and suspension SAM check was not performed prior to engaging the services of a vendor. Subsequent SAM checks of the two vendors were performed only after the vendor invoices had been paid by the Organization. The SAM checks, however, did not identify any debarment, suspension or exclusion of these vendors from participation in federal assistance programs or activities. The SAM checks were not performed timely due to a miscommunication among Organization departments. Questioned Costs: None. Context: We compared the Organization's policies and procedures to the applicable sections of the Uniform Guidance. In addition, from a population of fifteen (15) transactions qualifying for the procurement of goods and services, we selected three (3) transactions for testing. A non-statistical sampling methodology was used to select the sample. Cause: The Organization did not check two (2) vendors for debarment and suspension. Effect: Not procuring goods and services in accordance with requirements outlined by the Uniform Guidance increases the risk that federal funds are not being expended properly. Recommendation: We recommend that additional training be performed to educate individuals over the importance of performing suspension and debarment checks before engaging the services of a vendor. We further recommended that an appropriate review checklist be put in place which requires the reviewer to assert that a SAM screenshot has been attached before initiating purchases. Views of Responsible Officials and Planned Corrective Actions: Response: The Organization agrees with the finding. The Organization will provide additional trainings and create a review checklist for purchasers to follow prior to initiating purchases with federal funds. Person(s) responsible for implementing: Dianna Linder, Director of Grants. Implementation date: March 1, 2021.

Finding: Procurement Program: Maternal and Child Health Federal Consolidated Programs CFDA Number: 93.110 Passed-through Montana Department of Public Health and Human Services Criteria: General procurement standards outlined in 2 CFR 200.318(a) state that a non-federal entity must use its own documented procurement procedures which reflect applicable state, local and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified by the Uniform Guidance (section 200.318 - 200.326). The Uniform Guidance outlines requirements over the proper oversight of contractors, having written standards of conduct for employees involved in contracting, awarding contracts to responsible contractors, maintaining records and documenting the history of procurements including price cost analysis, conducting all transactions in a manner which provides full and open competition, utilizing the methods of procurement outlined in the Uniform Guidance, and ensuring every purchase order or contract includes the applicable provisions in Appendix II. Additionally, per Uniform Guidance (2 CFR ?200.319), procurement files are to support full and open competition, or support for rationale/justification to limit the competition in those cases where competition is limited. Guidance requires the Organization to maintain documentation, whether written or electronic, regarding purchasing and contracting transactions and bids should be obtained for all applicable purchases that exceed Billings Clinic?s minimum competitive sourcing purchasing threshold ($10,000). Condition: The Organization's policies and procedures over procurement do not conform to the requirements outlined by the Uniform Guidance as several required policies and procedures are not included. In addition, the Uniform Guidance establishes methods of procurements to be utilized which relate to the acquisition of both goods and services. The Organization does not have specific guidance for the purchase of goods or services as it relates procurement compliance. As a result, the items selected for testing did not have adequate documentation surrounding the Organization's process and ultimate decision. Questioned Costs: None. Context: We compared the Organization's policies and procedures to the applicable sections of the Uniform Guidance. In addition, from a population of fifteen (15) transactions qualifying for the procurement of goods and services, we selected (3) transactions for testing. A non-statistical sampling methodology was used to select the sample. Cause: The Organization's policies were not compared to Uniform Guidance to ensure all elements were incorporated. Additionally, adequate support did not exist indicating proper procurement compliance. Effect: Not procuring goods and services in accordance with requirements outlined by the Uniform Guidance increases the risk that federal funds are not being expended properly. Recommendation: We recommend the Organization revise its policies and procedures to conform to the requirements of Uniform Guidance as soon as possible. Employees should be trained on these new policies and procedures and periodic reviews should be performed by the Purchasing Department to ensure that policies are being followed. Additionally, we recommend a purchasing checklist be created to ascertain that proper procurement procedures are being followed and documented accordingly. Views of Responsible Officials and Planned Corrective Actions: Response: The Organization agrees with the finding. The Organization will update policies and procedures as they relate to procurement of goods and services to conform to the requirements of Uniform Guidance. The Organization will educate individuals as well as conduct periodic reviews that procurement policies and procedures are being followed. Person(s) responsible for implementing: Kodi Larson, Interim Director of Supply Chain. Implementation date: May 1, 2021.