Maricopa-Stanfield Irrigation and Drainage District

Criteria: Under the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires certain elements to be part of the District's procurement standards. The general procurement standards require the District to have and use documented procurement procedures that conform to the procurement standards identified in §§ 200.317 through 200.327 of the Uniform Guidance. The details of these requirements can be found in Title 2, Part 200, CFR Section 318(a). The procurement standard also requires written documentation including criteria for when sole source solicitation may be used. The District's written sole source policy does not state that sole source may be used in a public emergency; when a pass-through entity expressly authorizes; or after solicitation of more than one, competition is determined inadequate. The details of these requirements can be found in 2 CFR Section 320(c)(2). Please refer to URL https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part- 200#200.320. Condition/Context: The District has not formally updated their procurement policies to include the thresholds and policies required by the federal government uniform guidance Title 2, Part 200, 2 CFR Section 320 on competitive bidding. Additionally, procurement procedures, specifically required by the federal government for use in sole source solicitations, were not performed for expenses using federal awards. Effect: Major federal programs tested required procurement policies and specific competitive bidding procedures to comply with the use of awarded federal funds to the District. As of the date of this report, the District is not in compliance with those requirements. Cause: The District had not formally amended their procurement policies to conform to the federal procurement policies before spending federal funds. Additionally, the District uses a third-party grant manager (Electrical District #3, Pinal County Arizona) to perform competitive procurement on the District's behalf, in which all federal funds reimburse Electrical District #3 who had paid the vendor awarded the work through competitive means. The third-party grant manager was not awarded in conformity with sole source requirements. Recommendation: We recommend that management formally adopt amendments to their existing procurement policies to conform with U.S. Code of Federal Regulations, Title 2, Part 200, Uniform Administrative Guidance CFR Section 318(a). Additionally, we recommend management perform competitive procurement on all purchases made with federal funds and pay all vendors awarded directly from the District and not through a third-party conduit grant manager. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding, see corrective action plan.

Corrective Action Planned: Management concurs with the finding. The District’s policies will be updated and approved to conform to federal guidance. Additionally, management will begin paying all vendors awarded through competitive procurement, on projects paid with federal funds, directly from the District’s bank accounts and not through a third part grant administrator. Lastly, Management of MSIDD has since obtained express authorization from the pass-through entity to use ED3 as a sole source vendor.

2022-002

While reviewing the policies and procedures for MSIDD, we noted that the District has not yet formally approved a policy to conform to the Federal Uniform Guidance for Procurement. Therefore, we have reported a significant deficiency in procurement policies around compliance for this single audit report.

Maricopa Stanfield Irrigation and Drainage District respectfully submits the following corrective action plan for the year ended December 31, 2022. Baker Tilly, US, LLP 1115 E. Cottonwood Lane, Suite 100 Casa Grande, AZ 85122 Audit period: December 31, 2022 The findings from the December 31, 2022 schedule of findings and questioned costs is discussed below. The finding is numbered consistently with the number assigned in the schedule. FINDINGS RELATED TO FINANCIAL STATEMENTS REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SIGNIFICANT DEFICIENCY FINDING 2022-001 LEASE CONTRACT DOCUMENTATION RECOMMENDATION: We recommend the District maintain all contracts that are currently in force by both parties and properly track/maintain these contracts. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION Management concurs with the finding. Management will put in place a formal policy and procedure to track and maintain contracts in force. FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS SIGNIFICANT DEFICIENCY FINDING 2022-002 PROCUREMENT PROCESSES AND PROCEDURES RECOMMENDATION: We recommend that management formally adopt amendments to their existing procurement policies to conform with U.S. Code of Federal Regulations Title 2, Part 200, Uniform Administrative Guidance CFR Section 318 (a). Additionally, we recommend management perform competitive procurement on all purchases made with federal funds and pay all vendors awarded directly from the District and not through a third-party conduit grant manager. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION Management concurs with the finding. The District?s policies will be updated and approved to conform to federal guidance. Additionally, management will begin paying all vendors awarded through competitive procurement, on projects paid with federal funds, directly from the District?s bank accounts and not through a third part grant administrator. Lastly, Management of MSIDD has since obtained express authorization from the pass-through entity to use ED3 as a sole source vendor. If there are questions regarding this plan, please call Brian Yerges, General Manager or Kenneth Bodle, Director of Financial Services at 520-424-9311.