Second Chance Center Inc.

U.S. Department of Treasury Passed through the Colorado Department of Human Services Federal Financial Assistance Listing 21.027 Award 24 IBEH 18932 Coronavirus State and Local Fiscal Recovery Funds

Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Non-Compliance

Criteria: Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. This includes the requirements of a procurement policy and the processes that are to be followed when entering into contracts subject to procurement, suspension, and debarment.

Condition: In our testing of procurement, suspension and debarment it was identified that the Organization did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326 implemented at the beginning of the fiscal year. In addition, there was no formal review of vendors to ensure they are not suspended or debarred prior to entering into transactions.

Cause: Identification of the specific requirements under the Uniform Guidance and applicable CFR sections was made during the prior year audit, which occurred during fiscal year 2025. This resulted in a period of time in the fiscal year in which transactions were entered into without a compliant policy.

Effect: Due to the timing of the implementation of a compliant policy, a material contract was entered into without following procurement, suspension, and debarment processes as required by Uniform Guidance.

Questioned Costs: $292,562

Context/Sampling: One contract was identified as subject to procurement, suspension, and debarment requirements. That one contract was selected for testing.

Repeat Finding from Prior Year: Yes, prior year findings 2024-03 and 2024-04.

Recommendation: We recommend that management continuously review the now implemented policy to ensure it is in compliance with Uniform Guidance and being implemented throughout the Organization for all levels of transactions.

U.S. Department of Treasury Federal Financial Assistance Listing 21.027 All Awards State and Local Fiscal Recovery Funds

Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance

Criteria: Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required.

Condition: In our testing of procurement, suspension and debarment it was identified that the Organization did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326

Cause: Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements.

Effect: A lack of documented policies increase the overall risk that employees are not aware of the specific requirements with contracting and awarding contracts to lower tier entities.

Questioned Costs: None reported.

Context/Sampling: Overall procurement policy.

Repeat Finding from Prior Year: No.

Recommendation: We recommend that management establish a written policy that addresses all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections.

Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Treasury Federal Financial Assistance Listing 21.027 All Awards State and Local Fiscal Recovery Funds

Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance

Criteria: Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required.

Condition: In our testing of procurement, suspension, and debarment it was identified that there was no review of vendors to ensure that they are not suspended or debarred before purchases are made. In addition, there was no review of contracts entered into to ensure they included all requirements of the applicable CFR.

Cause: Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements.

Effect: A lack of compliance policies increases the overall risk of non-compliance.

Questioned Costs: None reported.

Context/Sampling: Overall procurement policy.

Repeat Finding from Prior Year: No.

Recommendation: We recommend that management establish a formal process to review vendors before purchases are made to ensure they are not suspended or debarred and are in compliance with the Uniform Guidance and 2 CFR sections 200.318 through 200.326.

Views of Responsible Officials: Management agrees with the finding.