165 0 obj <> endobj See 2 C.F.R. Quality of contracts and documents: identify vendors with poorly written contracts or payment documents. Recently in Massachusetts, a vendor offered a significant cost savings on supplies a local jurisdiction needed. This collection does not apply to Tribal governments. The goal of a vendor fraud audit is to determine whether the vendor intentionally acted to defraud the contracting organization. A lock icon ( The regulations related to allowable costs and cost principles are complex. This can lead to drawing incorrect conclusions about the data and documentation available. The audit team must explore and understand the vendors policies and procedures to adequately perform their assessment. In most cases, city procurement Treasury may request that recipients submit data for post-award compliance reviews, including information such as a narrative describing their Title VI compliance status. Our confidential hotline is for public employees and individuals with Chapter 30B procurement questions. Please remove any contact information or personal data from your feedback. WebA nonfederal entity with federal expenditures in excess of $750,000 is required by law to have a single audit completed. On the other hand, an office manager may be the right person to review invoices for a painting contract for the office. Recipients should note that NEUs and Non-UGLGs are not subrecipients under the SLFRF program. Most Commonwealth agencies and municipalities rely on vendors to supply the goods and services they need to operate. It is a red flag that the business may not be legitimate or well established. However, jurisdictions can take actions to ensure that grantees use ARPA funds in accordance with grant agreements. ARPA REQUIREMENTS TO BE INCLUDED IN Please limit your input to 500 characters. Additionally, establishing and maintaining open communication with grantees regarding grant requirements and expectations will help lead to successful project completion. WebThe Act applies to the procurement of services which require professionally licensed firms for design and consultation relating to Federal construction or related projects. Procurement and contracting requirements are in place as best practices to mitigate the risk of fraud, waste, or abuse of federal funds and are designed to ensure that federally funded contracts are competitive and fair. If a vendor is not registered beware. 2023 School of Government at the University of North Carolina. For example, the OIG asks participants in our classes to complete surveys at the end of each class. A few states have that power vested with the Governor, State Comptroller, Commissioner, or the Board or higher authority that oversees the procurement. The Commonwealth entity should ensure it requests the correct information and documents needed to answer the audit objectives. WebThey are awarded in accordance with the following requirements: ( i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Jurisdictions should always require the vendor to provide sufficient supporting documentation before making payment. All documentation must be maintained for at least 5 years from the end of the award term. Top-requested sites to log in to services provided by the state. Is there a strategic way to expend CSLFRF funds (i.e., how do we make the best use of funds and trigger the fewest compliance requirements)? A .mass.gov website belongs to an official government organization in Massachusetts. Some online survey tools even analyze data for you. As an example, we appliedBenfordsLaw to a dataset that contains the price of all items purchased by a city between 2009-2020. Becoming overly friendly threatens the auditors independence in performing their review. [1] Department of Treasury, Coronavirus State and Local Fiscal Recovery Funds: Guidance on Recipient Compliance and Reporting Responsibilities, at 8, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf. ARPA rules may impose additional reporting requirements for grants made to third-party employers, including public disclosure of grants provided. BenfordsLaw should not be applied to data sets that have stated minimum and maximum values or are assigned numbers, such as interest rates, telephone numbers or social security numbers. Part 200, Subpart F. Many recipients may choose to provide a subaward or contract to other entities to provide services to other end users. Before engaging with any vendor, do your research and review your contract closely. Once the audit team selects the type of audit to perform, the team must clearly prepare an audit plan and outline the expected audit procedures. Pursuant to the SLFRF Award Terms and Conditions, recipients are permitted to charge both direct and indirect costs to their SLFRF award as administrative costs as long as they are accorded consistent treatment per 2 CFR 200.403. This second article of the series discusses how to collect data and provides examples of how procurement officials can use the data. We use data every day without realizing it. Data is everywhere, and every function a government performs can generate valuable data. We are working on detailed roadmaps to implementing these UG policies and templates for different potential expenditure items. 11246. Recipients of Federal financial assistance from the Treasury are required to meet legal requirements relating to nondiscrimination and nondiscriminatory use of Federal funds. L. No. If the data is not in one of these formats, do not despair! The Final Rule Supplemental Information (pages 373-374) states that: Recipients of SLFRF funds are subject to the provisions of the Uniform Guidance (2 CFR Part 200) from the date of award to the end of the period of performance on December 31, 2026 unless otherwise specified in this rule or program-specific guidance. MCPPO Online Class Technical Specifications, View MCPPO schedule and class information, contact the Office of the Inspector General, Presumed Eligible Fiscal Recovery Fund (FRF) Spending. Data also can help identify vulnerabilities or concerns about fraud, waste or abuse. If your contract does not permit the vendor to charge a specific fee, then your jurisdiction has a basis for contesting the application of any additional fee. Civil Rights Compliance. The Office of the Inspector General often reviews vendor invoices and other documents as part of its duty to prevent and detect fraud, waste and abuse. It will include a detailed look at the various UG provisions and sample policies. Recipients should also note that subrecipients do not include individuals and organizations that received SLFRF funds as end users. For this program, the city of Scranton has elected to award . The following bar chart, which can be made using Excel, shows the distribution of the first digit of the purchase price for each item in the dataset, with all vendors grouped together. WebThe State will comply with 200.321, 200.322, and 200.323 and ensure that every purchase order or other contract includes any clauses required by 200.327. Without thinking much about it, you gathered data and made a decision based on that data. Benfords Law analysis: this analysis may highlight a vendor with billing discrepancies that warrant further review. Where feasible, municipalities should consider taking steps to ensure competition is accessible to minority- and women-owned businesses in addition to labor surplus area firms. Remember to consider whether your data gives you enough information to help you make decisions. The feedback will only be used for improving the website. There is a visible correlation between the number of change orders and the contract length, which makes intuitive sense: generally, longer contracts have more change orders. Every jurisdiction needs to review vendor payment requests to make sure they are accurate. Many of the UG provisions require that the local government adopt and implement policies and procedures to ensure compliance with its requirements. Did you know reporting is not the only requirement for use of American Rescue Plan Act (ARPA) funds? Federal Uniform Guidance rules apply as well. Uniform Guidance? Never heard of it? Dont worry, weve got you covered. It is intended to change the course of the COVID-19 pandemic, provide direct relief to Americans, and build a bridge to equitable economic recovery. All rights reserved. To help prioritize which vendors to audit, consider the factors below. Failure to implement sound grant monitoring policies that ensure proper use of ARPA funds can result in recoupment of funds by the federal government. After the official bid opening requiring a review of the bid submittals and verification of the bid results by a party not involved in the bid process. Adhering to local procurement and contracting policies, standards, or procedures, including applicable local or state laws. Once the data has been transformed into auser-friendlyformat, it can be used in a variety of ways to assist with future procurements and other business decisions. Because ARP/CSLFRF in the revenue replacement category may be spent on any government service authorized under state law (assuming allowable cost items), a local government may use ARP/CSLFRF to supplant employees salaries and benefits during the award term, thus freeing up general fund or enterprise fund monies to be spent on more complex capital projects or programs. Many of our past reports highlight fraudulent or inaccurate vendor billing. As many of you already know, the US Treasury last week issued the Final Rule on the funds granted to state and local governments by the American Rescue Plan Act. Webprocurement can be used. When initiating an audit it is important to inform the vendor exactly which personnel and/or processes you will be auditing. The following is a sample policy to address the specifics of property management: Note that there are some grey areas related to whether and how a local government must seek US Treasurys approval for disposal of real property, equipment, or supplies over $5,000, and whether or not a local government will have to repay US Treasury its federal share. [22] Per 2 CFR 200.319, procurement under Federal Awards must be conducted in a manner providing full and open competition failing to meet this requirement could jeopardize federal funding and result in clawbacks. We will use this information to improve this page. Taking incremental steps and continually finding areas for improvement will create a robust data program and help you make informed, data-driven decisions. The ARPA program requires recipients to comply with the procurement provisions of Title 2, Part 200 of the Code of Federal The following are a sample subaward policy, risk assessment, subaward agreement template, and subrecipient monitoring tool (they are all in a single Word file): Although there is a lot of federal red tape to navigate regardless of how a local government expends its ARP/CSLFRF funds, there are some opportunities to reduce a local units compliance burden. Requirements for bidders and contractors under this order are explained in the specifications. Note: This language must be included in the Bid solicitation. Exceptions to requirements for small purchase or formal method competitive rules. 2. All other non-Federal entities, including subrecipients of a State, must follow the procurement standards in 200.318 through 200.327. To ensure that the cost items within an eligible project are proper, a local government must adopt and implement an Allowable Costs and Cost Principles Policy. If procurement is only possible through non-competitive methods, municipalities will need to justify use of a non-competitive procurement process, only permissible when one of the following conditions are met: the item is below the micro-purchase threshold established by the municipality; the item is only available from a single source; the public exigency or emergency will not permit a delay from publicizing a competitive solicitation; or after solicitation of a number of sources, competition is determined inadequate. BenfordsLaw is a mathematical observation about the frequency distribution of the first digits within a set of naturally occurring numbers. Administrative costs: Recipients may use funds for administering the SLFRF program, including costs of consultants to support effective management and oversight, including consultation for ensuring compliance with legal, regulatory, and other requirements. 3) Consider publishing all sole source requests for public notice. With more complete information, local government officials are now looking to finalize (at least some) expenditure decisions. Past performance: for example, businesses previously on state or federal suspension or debarment lists may pose a greater risk of noncompliance or poor performance. The first step in implementing a vendor audit program is determining who to audit. Review the contract and be familiar with its terms. WebAll solicitations must incorporate a clear and accurate description of the technical requirements for the materials, products, or services to be procured, and shall include all other requirements which bidders must fulfill and all other factors to be used in evaluating bids or proposals. Further, costs must be reasonable and allocable as outlined in 2 CFR 200.404 and 2 CFR 200.405. The feedback will only be used for improving the website. Appendix 1: Allowable Use Matrix Background On March 11, 2021, the American Rescue Plan Act (ARPA) of 2021 was signed into law. Payment reviews are a key part of contract administration, and insufficient reviews leave your jurisdiction vulnerable to improper or questionable payments to vendors. Use this button to show and access all levels. To promote appropriate and effective use of ARPA funds, jurisdictions should: Jurisdictionsshould also develop evidence-based methods of measuring performance and project goals to make sure that grantees meet those expectations. 128, 40064-40068. The jurisdiction did not have any policies related to procuring services exempt from Chapter 30B and the jurisdiction did not procure automobile towing and storage services with a competitive process. Financial compliance audits examine whether the vendor is billing appropriately. Alternatively, if the recipient does not have a NICRA, the recipient may elect to use the de minimis rate of 10 percent of the modified total direct costs pursuant to 2 CFR 200.414(f). Federal procurement rules not applicable to certain ARPA-funded projects Tuesday, August 30, 2022. We also are grateful for a group of dedicated county attorneys, including Bob Shaver, Glynn Rollins, Anne Marie Tosco, Aimee Scotton, and Russ Burrell, who provided helpful feedback on the draft policies. Likewise, auditors and investigators should be prepared for individuals who become angry or aggressive in response to routine questions, or key vendor personnel who disappear during a critical part of the audit. This page is located more than 3 levels deep within a topic. When was the last time your client revised their procurement contracts? A local government should craft its policies and procedures so that they can be reasonably implemented by its staff. A .mass.gov website belongs to an official government organization in Massachusetts. Prior to beginning the audit, the team should provide logistical information to the vendor in order to combat potential pushback throughout the audit. And always carefully read all contract terms before entering into any contract, October 2018 Procurement Bulletin Article. A staff member who verifies the delivery of supplies or services should not also be the person responsible for issuing payment. Publishing and documenting clear standards in procurement solicitations and evaluation criteria on how a municipality will determine a responsive and responsible. Municipalities should ensure that factors that may be overly restrictive to free and open competition are not included, such as placing unreasonable requirements on vendors to qualify or establishing any steps in the procurement process that are arbitrary or irrelevant to the award of contracts necessary and reasonable for the implementation of the use of funds under this award. Please include this language separately in the bid solicitation. See, e.g., 2 C.F.R. Are there existing sources for that data? Impaired independence can hinder an auditors professional judgment or create the appearance that his professional judgment has been compromised. Please let us know how we can improve this page. For more information about using COMMBUYS, contact the Operational Services Division at (617) 720-3300. A compliance audit is the overarching term for ensuring that a vendor is complying with the terms of a contract. Further, a prequalification or screening process for vendors interested in providing certain services, such as towing and storage, helps ensure that the public is receiving services from a qualified vendor at a reasonable price. c. 30B, (1)(b)(9). Two significant areas that did not change are the applicability of Uniform Grant Guidance to ARPA funds and the federal audit requirements over these funds. Capital Funds Project website. You can access that post here. After contracting with the vendor, however, the local jurisdiction began receiving large quantities of supplies that it had not ordered. UNC Chapel Hill Some information may be in spreadsheets or in existing databases or electronic systems. Broadly speaking, data is any fact about an object or concept. However, developing comprehensive monitoring policies, measuring project performance and conducting grantee audits can help jurisdictions reduce fraud, waste and abuse. During this session, You skipped the table of contents section. (A) statutory restrictions under the ARPA, which include: offsetting a reduction in net tax revenue, and deposits into pension funds, and (B) other restrictions on use, which include: debt service and replenishing reserves, settlements and judgments, and general restrictions. (See Final Rule pp. Regulatory compliance audits determine whether the vendor is following all of the laws and regulations relevant to the goods and services they provide (e.g., environmental regulations). In this case, the subaward to a nonprofit is based on the services that the recipient intends to provide (assistance to households experiencing homelessness), and the nonprofit is serving as the subrecipient, providing services on behalf of the recipient. For instance, data analysis can reveal patterns in payroll expenditures or purchasing, track whether employees are following policies and procedures, or measure staff or vendor performance. The Uniform Guidance outlines the requirements that pertain to program income at 2 CFR 200.307. Confirm that an invoice for labor accurately reflects the time that the vendor or its employees worked. Inaccurate vendor billing is billing appropriately independence in performing their review audit completed or personal data your... 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