COOPERATIVE CENTER FEDERAL CREDIT UNION

Finding 2021-001 Criteria Non-federal entities must follow the procurement standards set forth at 2 C.F.R. ?? 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 C.F.R. part 200. Condition The credit union?s current purchasing policy did not reflect the required standards for procurement under Federal requirements, including but not limited to: 1. A code of conduct for employees conducting procurements, including criteria regarding conflicts of interest; 2. Selection procedures for procurement transactions; 3. Different types of procurement, including when and how to use them; 4. Requirements for a cost or price analysis for procurement actions, including contract modifications, in excess of the Simplified Acquisition Threshold (currently at $25,000); 5. A process for resolving disputes, claims and protests of awards; 6. Limited conditions under which sole source or non-competitive procurement may occur; and 7. Procedures to verify how suspension / debarment would be verified for procurement actions in excess of the Simplified Acquisition Threshold (currently at $25,000). Cause Upon inquiry with management, it was noted that the credit union did not have a procurement policy in place. The credit union was not aware of this requirement and has not made any purchases subject to the required standards of procurement. Effect There was no monetary effect to this finding. This finding falls under the audit area of Procurement. Materiality for this assertion would be instances where the credit union was negligent or did not comply with regulations or material data cannot be substantiated in the credit union?s records. All instances in this assertion would be reported through the compliance audit. The auditor would use professional judgment if the reports were being reconciled in a less than timely manner. In addition, material noncompliance (as defined by TWHC) for this assertion has been determined as an error rate greater than $59,000, individually and/or in aggregate, and a 10% finding rate for items sampled. Cooperative Center Federal Credit Union is not in compliance with the grant requirements related to procurement policy. In evaluating the finding, the auditor determined that the finding meets the definition of a significant deficiency but does not rise to the level of material weakness. Recommendation 2021-001a We recommend the institution to have the purchasing policy and include the provision stated in the 2 C.F.R. ?? 200.318 through 200.326.

Finding 2021-002 Criteria Non-federal entities must establish written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively). Written policies, procedures, and standards of conduct should address how the credit union will address the required areas of the CFR as reflected below. 2 CFR sections 200.300 (Statutory and national policy requirements) states: (a) The Federal awarding agency must manage and administer the Federal award in a manner so as to ensure that Federal funding is expended and associated programs are implemented in full accordance with the U.S. Constitution, Federal Law, and public policy requirements: Including, but not limited to, those protecting free speech, religious liberty, public welfare, the environment, and prohibiting discrimination. The Federal awarding agency must communicate to the non-Federal entity all relevant public policy requirements, including those in general appropriations provisions, and incorporate them either directly or by reference in the terms and conditions of the Federal award. (b) The non-Federal entity is responsible for complying with all requirements of the Federal award. For all Federal awards, this includes the provisions of FFATA, which includes requirements on executive compensation, and also requirements implementing the Act for the non-Federal entity at 2 CFR parts 25 and 170. See also statutory requirements for whistleblower protections at 10 U.S.C. 2409, 41 U.S.C. 4712, and 10 U.S.C. 2324, 41 U.S.C. 4304 and 4310. 2 CFR sections 200.400 (Policy guide) states: The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles, and must provide for adequate documentation to support costs charged to the Federal award. (e) In reviewing, negotiating and approving cost allocation plans or indirect cost proposals, the cognizant agency for indirect costs should generally assure that the non-Federal entity is applying these cost accounting principles on a consistent basis during their review and negotiation of indirect cost proposals. Where wide variations exist in the treatment of a given cost item by the non-Federal entity, the reasonableness and equity of such treatments should be fully considered. See the definition of indirect (facilities & administrative (F&A)) costs in ? 200.1 of this part. (f) For non-Federal entities that educate and engage students in research, the dual role of students as both trainees and employees (including pre- and post-doctoral staff) contributing to the completion of Federal awards for research must be recognized in the application of these principles. (g) The non-Federal entity may not earn or keep any profit resulting from Federal financial assistance, unless explicitly authorized by the terms and conditions of the Federal award. See also ? 200.307. Condition The credit union?s current accounting policies do not address the elements required for the administration of federal programs under 2 CFR sections 200.300 and 200.400. Cause The credit union was able to provide policies and procedures for the normal operations of a credit union; however, the credit union was not aware of the requirement that policies and procedures needed to conform to the elements required for the administration of federal programs under 2 CFR sections 200.300 and 200.400. Effect There was no monetary effect to this finding. This finding falls under the audit area of general administration of the federal program. Materiality for this assertion would be instances where the credit union was negligent or did not comply with regulations or material data cannot be substantiated in the credit union?s records. All instances in this assertion would be reported through the compliance audit. The auditor would use professional judgment if the reports were being reconciled in a less than timely manner. In addition, material noncompliance (as defined by TWHC) for this assertion has been determined as an error rate greater than $59,000, individually and/or in aggregate, and a 10% finding rate for items sampled. In evaluating the finding, the auditor determined that the finding does not rise to the level of a significant deficiency or a material weakness. Recommendation 2021-002a We recommend the credit union establish policies and procedures that address the required elements in the 2 CFR sections 200.300 and 200.400.