City of Hope

Internal control deficiency and noncompliance over Period of Performance. Identification of the federal program: Research and Development Cluster See the Schedule of Findings and Questioned Costs for table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.344 – Closeout. The Federal awarding agency or pass-through entity will close out the Federal award when it determines that all applicable administrative actions and all required work on the Federal award have been completed by the non-Federal entity. If the non-Federal entity fails to complete the requirements, the Federal awarding agency or pass-through entity will proceed to close out the Federal award with the information available. This section specifies the actions the non-Federal entity and Federal awarding agency or pass-through entity must take to complete this process at the end of the period of performance: (b) Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all financial obligations incurred under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. Condition: During our testing over period of performance, we observed management did not have effective internal controls in place to ensure all financial obligations incurred were liquidated under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. Cause: Management did not have effective internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above. Effect or potential effect: Management was reimbursed from the grantor for financial obligations incurred that were not liquidated under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. Questioned costs: $5,227 – Assistance Listing Number 93.394, Award Identification Number – 7 R01 CA184792 Questioned costs were computed by taking the total financial obligations incurred that were not liquidated under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. Context: Testing over period of performance were performed over City of Hope and Translational Genomics Research Institute separately with respect to internal controls as they operate under different internal control environments and combined with respect to compliance. During our testing over period of performance, we obtained a listing of federal awards with performance period ending dates during the audit period and tested transactions for federal award costs to verify that the liquidation occurred within the allowed time period. We selected a compliance sample of 26 (23 samples for City of Hope and 3 samples for Translational Genomics Research Institute). The total value of the 23 samples for City of Hope was $223,159 and the total value of the 3 samples for Translational Genomics Research Institute was $3,733. The questioned costs were found within the City of Hope samples. The total population subjected to testing for City of Hope was $4,615,052. There was 1 ($5,227) out of 23 ($223,159) samples where management was reimbursed from the grantor for a financial obligation incurred that was not liquidated under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management develop and implement effective internal controls to ensure all financial obligations incurred were liquidated under the Federal award no later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. In addition, management should refund the questioned costs. Views of responsible officials: In response to this finding City of Hope (COH) will complete the following: 1. Research Accounting will present finding and revisit guidelines on period of performance requirements with Research and Post Award Accounting personnel. 2. COH will refund the identified questioned costs.

Internal control deficiency and noncompliance over Procurement. Identification of the federal program: Research and Development Cluster See the Schedule of Findings and Questioned Costs for table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards. The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, formal procurement methods are required. Formal procurement methods require following documented procedures. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. During our testing over small purchase procurements, we observed management did not obtain price or rate quotations from an adequate number of qualified sources at the time of procurement. Cause: Management did not have effective internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above. Effect or potential effect: Small purchase procurements, formal procurement methods, and noncompetitive procurements were not supported by effective internal controls and could potentially include unreasonable prices or rates. Questioned costs: $75,518 – Assistance Listing Number 93.398, Award Identification Number – 2 R25 CA171998 $67,225 – Assistance Listing Number 93.393, Award Identification Number – 1 R01 CA242218 $54,900 – Assistance Listing Number 93.394, Award Identification Number – 7 R01 CA202797 $48,980 – Assistance Listing Number 93.395, Award Identification Number – 2 P01 CA163205-06A1 Assistance Listing Number 93.395, Award Identification Number – 1 U19 CA264512 Assistance Listing Number 93.395, Award Identification Number – 1 R01 CA266457 Assistance Listing Number 93.396, Award Identification Number – 7 R35 CA210087 Assistance Listing Number 93.396, Award Identification Number – 1 R01 CA247550 Assistance Listing Number 93.853, Award Identification Number – 7 R01 NS106170 $41,408 – Assistance Listing Number 93.395, Award Identification Number – 1 R01 CA266457 Assistance Listing Number 93.396, Award Identification Number – 1 U01 CA275808 $12,195 – Assistance Listing Number 93.394, Award Identification Number – 1R01CA241845-01A1 $5,805 – Assistance Listing Number 93.361, Award Identification Number – 1 R21 NR019866 Questioned costs were computed by taking the total small purchase procurements that were not supported by adequate documentation of $75,518 + $67,225 + $54,900 + $48,980 + $41,408 + $12,195 + $5,805 for a total of $306,031. Context: Management did not obtain price or rate quotations from an adequate number of qualified sources at the time of procurement. Given the prior year finding was not remediated, management evaluated the entire population of small purchase and formal procurements and we tested the entire population evaluated by management. We obtained a listing of 15 small purchase procurements and 1 formal procurement. The total value of small purchase procurements was $797,099 and formal procurements was $319,047 for a total of $1,116,146. There were 7 ($306,031) out of 15 ($797,099) items where price or rate quotations from an adequate number of qualified sources were not obtained at the time of procurement. Identification as a repeat finding, if applicable: Yes – 2022-001. Recommendation: We recommend that management develop and implement effective internal controls to ensure the compliance requirements over procurements are performed. In addition, management should review the items identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: In response to this finding COH had/will complete the following: 1. Management provided training to reinforce current policy requirements to Research, Accounting and Procurement personnel to emphasize procurement guidelines prior to requisition submission. Training was completed on September 7 and 15, 2023. 2. Accounting reviewed sample size of federally funded procurement to ensure controls have been remediated. 3. Accounting will review the items identified as questioned costs to identify if any improper payments were made to COH.

Finding 2022-001: Internal control deficiency and noncompliance over Procurement and Suspension and Debarment. Identification of the federal program: Research and Development Cluster See findings text for the table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 ? Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) ? General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 ? Methods of procurement to be followed ? the non-Federal entity must have and use documented procurements procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases ? (i) small purchase procedures ? the acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods ? when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, formal procurement methods are required. Formal procurement methods require following documented procedures. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold ? (1) sealed bids ? a procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) proposals ? a procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 ? Suspension and debarment ? Non-Federal entities are subject to the non-procurement debarment and suspension regulations that 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: During our testing over small purchase procurements and formal procurement methods, we observed management did not have effective internal controls in place to ensure that price or rate quotations were obtained from an adequate number of qualified sources at the time of procurement and sealed bids or proposals were obtained. In addition, during our testing over suspension and debarment, we observed management did not have effective internal controls in place to ensure vendors with covered transactions greater than $25,000 were not suspended or debarred. Cause: Management did not have effective internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above. Effect or potential effect: Small purchase procurements and formal procurement methods were not supported by effective internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $560,068 ? Assistance Listing Numbers 10.025, 10.310, 12.351, 12.420, 12.910, 93.103, 93.113, 93.121, 93.172, 93.226, 93.242, 93.273, 93.286, 93.301, 93.307, 93.310, 93.353, 93.361, 93.393, 93.394, 93.395, 93.396, 93.397, 93.398, 93.399, 93.837, 93.838, 93.839, 93.847, 93.853, 93.855, 93.859, 93.865, 93.866, 93.867, 93.879. See corresponding award identification numbers in the identification of federal award section above. Questioned costs were computed by taking the total small purchase procurements, formal procurements, and suspension and debarment procurements that were not supported by adequate documentation of $196,639 ($54,000 + $28,560 + $114,079), $300,300, and $63,129, respectively for a total of $560,068. Context: Testing over procurement and suspension and debarment were performed over City of Hope and Translational Genomics Research Institute separately as they operate under different internal control environments. During our testing over small purchase procurements for City of Hope, we obtained a listing of 26 small purchase procurements and selected a sample of 5. The total value of the 5 small purchases selected was $282,719 out of the total population of $1,510,159. There was 1 ($54,000) out of 5 ($282,719) selections where management didn't follow its procurement policy to fill out the "Supplier Selection Justification" form, which is required to be completed for all small purchase procurements. There was 1 ($28,560) out of 5 ($282,719) selections where price or rate quotations were not obtained from an adequate number of qualified sources at the time of procurement. There were 2 ($114,079) out of 5 ($282,719) selections where management didn?t follow its procurement policy to evaluate existing contracts at the end of the contract term. During our testing over formal procurements for City of Hope, we obtained a listing of 2 formal procurements and selected a sample of 2. The total value of the 2 formal procurements were $663,744. There was 1 ($300,300) out of 2 ($663,744) selections where management didn?t follow its procurement policy to evaluate existing contracts at the end of the contract term. During our testing over suspension and debarment for Translational Genomics Research Institute, we obtained a listing of 18 vendors with covered transactions greater than $25,000 and selected a sample of 6. The total value of the 6 vendors selected was $244,467 out of the total population of $1,332,111. There was 1 ($63,129) out of 6 ($244,467) selections where a search for suspension and debarment was not completed. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that management develop and implement effective internal controls to ensure small purchase procurements were supported by price or rate quotations from an adequate number of qualified suppliers, formal methods of procurement included sealed bids or proposals, and vendors with covered transactions greater than $25,000 were not suspended or debarred. Views of responsible officials: In response to this finding City of Hope will implement the following: 1. Procurement Operations to provide training to reinforce current policy requirements. Training will also include Strategic Sourcing and Research personnel to emphasize procurement guidelines prior to requisition submission. 2. Corporate Accounting will select a sample size of federally funded procurement spend to ensure controls have been appropriately remediated. 3. Procurement and Sourcing department will review current long-term contracts pertaining to federal funding to ensure adherence with documented compliance standards. 4. To ensure controls are operating effectively around suspension and debarment reviews, finance leadership will work with the purchasing department to update internal control policies to confirm there is a full review of all vendors engaged to work on federally funded programs. 5. Purchasing department will perform a review of existing contracts to ensure suspension and debarment reviews have been completed.