SAN FRANCISCO JAZZ ORGANIZATION

III. FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS 2021-001 Procurement Federal Assistance Listing Number: National Endowment for the Arts 45.024 Criteria A non-Federal entity must follow the procurement standards set out at 2 CFR sections 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 CFR part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors? performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) . 3. Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(c); the competitive proposals method under the conditions specified in 2 CFR section 200.320(d); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(f). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR part 200, ?Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.? Condition SFJAZZ does not have a formal procurement policy in place. Context During our testing and inquiries performed with management it was noted that SFJAZZ does not currently have a formal policy in place regarding general procurement standards. Cause Lack of a formal policy that speaks to general procurement standards with regards to federal grants. Effect The lack of a formal policy could lead to contractors being hired that may be suspended or debarred. Questioned Costs There were no questioned costs associated with this finding. Recommendation We recommend that SFJAZZ implement a formal written policy regarding procurement and specific to federal grants. View of Responsible Officials: SFJAZZ agrees with the finding and is committed to implementing enhanced policies and procedures to address the finding. Planned Corrective Action: In using federal funds for procurements, SFJAZZ is bound to adhere to the procurement standards identified in 2 CFR. The San Francisco Jazz Organization (SFJAZZ) has drafted the Procurement and Contracting Policy # 2021-12 outlining SFJAZZ?s commitment in securing goods and services using grant funds from reputable and responsible suppliers in an equitable and competitive manner and in accordance with applicable federal and state laws, regulations, and guidance. The Program Administrators Randall Kline and Lilly Schwartz with overall responsibility to ensure SFJAZZ?s Procurement and Contracting Policy #2021-12 (the Policy) is adhered to. The Program Administrators are to provide Finance with all requested supporting documentation with any requests for payments and execution of contracts. Any and all preapprovals and/or approvals required from the NEA will be facilitated by the Associate Director of Institutional Giving, Kate Goldstein. Implementation Date: February 1, 2022 Responsible Personnel: Judy Gum, CFO Contact Information: jgum@sfjazz.org

2021-002 Payroll Federal Assistance Listing Number: National Endowment for the Arts 45.024 Criteria Payroll expenses allocated to the grant should include detailed records of how the expenses are being allocated and charged to the grant in a given pay period. This should include a process for maintaining accounting and supporting records to substantiate that all expenses are eligible and allowable. Condition SFJAZZ charged payroll expenses to the grant by retrospectively applying a percentage of the gross salary for each employee who worked on the grant. There was an attestation that was signed by the project manager and project administrator however, the attestation was not completed until after the grant was complete rather than tracking employee time during the actual pay periods in which work on the grant was performed. Context During our testing, we noted that payroll was allocated to the grant retrospectively rather than being tracked during the actual grant period. Cause Lack of documentation detailing of hours or portion of time spent on the grant by each employee on a monthly or by payroll basis. Effect Noncompliance may cause payroll expenditures charged to the grant to be inaccurate. Questioned Costs There were no questioned costs associated with this finding. Recommendation We recommend that SFJAZZ implement a formalized process for grant accounting and reporting. The finance team should be included and have approval responsibilities in the budget formulation/creation, tracking, expense allocations, and reporting process that includes an internal review and acceptance of interim and final reports by the CFO prior to the reports being submitted to grantors. Payroll allocation procedures should include Program or Grant Administrator(s) monthly tracking of time spent by employee, including allocation of time, in the accounting records to grant cost centers. View of Responsible Officials: SFJAZZ agrees with the finding and is committed to implementing enhanced policies and procedures to address the finding. Planned Corrective Action: Finance has implemented the following controls to ensure that the actual time spent by staff on the program is reflected in the progress and final budget report to the NEA: 1. The use of timecards during project execution of direct payroll expenses to match payroll records. 2. The Program Administrators, Lilly Schwartz and Randall Kline, are to aggregate and to approve timecards of all project staff including any allocation on time spent on the project. 3. Once Finance receives approved timecards and allocations, they are to be reviewed against approved budget, appropriate coding, and note any variances or discrepancies. Any and all material variances and/or unbudgeted line items are flagged by Finance and reviewed with the Program Administrators and the Associate Director of Institutional Giving, Kate Goldstein. 4. Kate Goldstein is to liaise with the NEA on items requiring additional approvals and/or documentation. Finance is to review NEA documents, updated budget (if any), and attest against approved budget and payroll records. Implementation Date: September 9, 2022 Responsible Personnel: Judy Gum, CFO Contact Information: jgum@sfjazz.org