As part of this information-gathering process, team members should strive to interview as many vendor employees as possible to corroborate their evidence and ensure the team has a complete understanding of the vendors current state. However, the audit team should be careful not to become too friendly with their auditees. One key oversight tool is the vendor audit. For example, perhaps one morning as you left your house, you looked outside, saw that it was raining and reached for a raincoat. Please let us know if you have any questions! Jurisdictions should segregate these duties in order to create an additional layer of invoice review and further protect public funds. A helpful starting point is to pull data from current and historical sources and compile it into a more data-friendly format, such as an Excel spreadsheet file. People often make business decisions based on intuition, anecdotes or institutional lore. But taking the standard allowance and spending all the funds in the revenue replacement category does not convert these monies into general funds. 11246. L. No. Yes. Direct questions related to design and construction procurement to the Attorney Generals Office. WebSubpart F, Audit Requirements (UG single audit required when a non-Federal entity expends more than $750,000 in federal financial assistance in a fiscal year (the $750,000 threshold includes the total expenditures from all federal awards)). See 2 C.F.R. An official website of the Commonwealth of Massachusetts, This page, OIG Bulletin Articles Related to the Use of ARPA Funds, is, OIG Bulletin Articles Related to the Use of ARPA Funds. Equipment and Real Property Management. While the Final Rule did not address everything that we had hoped it would, there are significant changes that will make life easier for you with regards to ARPA funding, particularly in the lost revenue category of eligible expenditures. Ensuring that submitted bids are sealed and secured physically or digitally until the bid opening. Requirements for bidders and contractors under this order are explained in the specifications. Note: This language must be included in the Bid solicitation. Web( a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this 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. 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. Top-requested sites to log in to services provided by the state. Is it something you can collect in the future? 200.317, 200.322, and 200.326. See M.G.L. The first step in implementing a vendor audit program is determining who to audit. Additional controls that your organization should implement include written policies that explicitly identify appropriate allocation methods, accounting standards and principles, compliance monitoring checks for program income calculations, and records. Please do not include personal or contact information. Government entities that have received ARPA funding may be able to award grants to third parties. c. 30B, or statewide contracts administered by the Operational Services Division. Webprocurement can be used. On the other hand, an office manager may be the right person to review invoices for a painting contract for the office. Additionally, ARPA funds are subject to oversight by certain state and federal agencies, including the Massachusetts OIG. 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. Additionally, establishing and maintaining open communication with grantees regarding grant requirements and expectations will help lead to successful project completion. Tie grant disbursements to deliverables, milestones or other reportable actions when possible. Jurisdictions should only make payments after reviewing all invoices and supporting documentation for accuracy and completeness. Mayor Smiley wants to hear from you! Generally, Chapter 30B applies even when a local jurisdiction uses federal funds to pay for supplies or services. Are there existing sources for that data? Justifying and documenting the selection of vendors, including: (1) that a vendor is responsive to the requirements outlined in the procurement, (2) responsible, (3) not debarred from doing business with the federal government, and (4) offering a reasonable, competitive cost, based on cost or price analysis completed by the municipality. Look for those in the coming weeks. The standard allowance is available to all counties, including ones with allocations under $10 million. The jurisdiction stopped making payments to the vendor and began to investigate whether it entered into some sort of bulk purchasing scheme. Can the municipality clearly document and justify the reasoning to utilize an existing vendor relationship in lieu of following normal procurement and contracting processes? It is easy to become overwhelmed when determining how best to use this untapped resource. The following is a sample policy: Recordkeeping Requirements. A .mass.gov website belongs to an official government organization in Massachusetts. There are many reasons to audit contracts with vendors and suppliers. Each recipient should review program requirements, including Treasurys final rule and the recipients Award Terms and Conditions, to determine and record eligible uses of SLFRF funds. Impaired independence can hinder an auditors professional judgment or create the appearance that his professional judgment has been compromised. This scope is different than what is included in the current contract and may be considered noncompetitive. First, your organization must clearly identify to the subrecipient: (1) that the award is a subaward of SLFRF funds; (2) any and all compliance requirements for use of SLFRF funds; and (3) any and all reporting requirements for expenditures of SLFRF funds. 559 0 obj <> endobj Please include this language separately in the bid solicitation. January 14, 2022 ARPA Final Rule and Procurement Requirements for Audit Services *REVISED January 28, 2022* As many of you already know, the US 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)? This training discusses the differences between subrecipients and contractors under the federal rules, fiscal recovery fund spending that is presumed eligible due to the nature of the beneficiaries or the type of project, and rules relating to using fiscal recovery funds on capital expenditures. Jurisdictions therefore must dedicate staff to evaluate documents and completed work reports from contractors to make sure that they have followed the contract before issuing payment. For example, the OIG asks participants in our classes to complete surveys at the end of each class. Ongoing monitoring of any given subrecipient should reflect its assessed risk and include monitoring, identification of deficiencies, and follow-up to ensure appropriate remediation. Within the Office, we have learned through experience that a wide range of staff with varied backgrounds can use data effectively. With the upcoming Project and Expenditure Report deadline fast approaching on April 30, join NACo and Government Finance Officers Association for an overview of what you need to know when it comes to reporting for the American Rescue Plan Act (ARPA) Coronavirus State and Local Fiscal Recovery Fund. This page is located more than 3 levels deep within a topic. 794; Title IX of the Education Amendments of 1972 (Title IX), 20 U.S.C. Review the contract and be familiar with its terms. To start, here is a summary list of UG policies and their triggers. See, e.g., 2 C.F.R. Before engaging with any vendor, do your research and review your contract closely. Contracted work, as well as the delivery of goods and services, accounts for a large portion of the Commonwealths spending. Data also can help identify vulnerabilities or concerns about fraud, waste or abuse. Share sensitive information only on official, secure websites. Program income does not include interest earned on advances of Federal funds, rebates, credits, discounts, or interest on rebates, credits, or discounts. endstream endobj startxref Confirm that an invoice for labor accurately reflects the time that the vendor or its employees worked. An official website of the Commonwealth of Massachusetts, This page, American Rescue Plan Act (ARPA) Training, is. There is no sure-fire method to uncover vendor fraud; therefore, it is the audit teams responsibility to remain alert and practice professional skepticism throughout the engagement. If so, are there differences between the local and federal requirements that may be in conflict? You can reach us at (617) 722-8838 or30BHotline@state.ma.us. Maintaining records sufficient to detail the history of procurement. The funds can be used to purchase equipment that improves or enhances the delivery of daily Confirm that the vendor billed at the rates stated in the contract or purchase order. 2023 School of Government at the University of North Carolina. After reviewing and analyzing data, managers can follow up and review more information, identify issues and resolve them. Identify conflicts of interest, fraudulent activities or other wrongdoing. Becoming overly friendly threatens the auditors independence in performing their review. Bid manipulation can also include allowing a vendor to submit bid documents after the public deadline or disclosing offers made by one vendor to another before the bids are opened publicly. Purchases made from a vendor pursuant to a General Services Administration federal supply schedule, available for use by governmental bodies, comply with the requirements of Chapter 30B. WebSourcing & Procurement. The vendor provided supporting documentation for the items or services on the invoice. Auditors should also be on alert for process owners who explain steps as they should be, or who respond using words such as usually, most of the time, supposed to or we try to. Commonwealth auditors should be cautious of auditees who are overly inquisitive and interested in what the audit team is looking for or why the vendor was selected for the audit. The goal of a vendor fraud audit is to determine whether the vendor intentionally acted to defraud the contracting organization. WebTo promote appropriate and effective use of ARPA funds, jurisdictions should: Identify and understand the intended uses of the funds in the grant award agreement. Extending the contract to include additional time may be deemed noncompetitive, because the contract expired before services began. The ARPA program requires recipients to comply with the procurement provisions of Title 2, Part 200 of the Code of Federal Web Must have documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements to support competition. Further, the individuals who review and approve invoices must know the contract terms, conditions and specifications. Properly documented. The jurisdiction became suspicious, researched the vendor and found no registration information on file with the Secretary of Commonwealth. 0 Subrecipients are subject to an audit pursuant to the Single Audit Act and 2 CFR part 200, subpart F regarding audit requirements, whereas contractors are not subject to an audit pursuant to the Single Audit Act and 2 CFR part 200, subpart F regarding audit requirements. A few requirements drawn from the Uniform Guidance include the following: Municipalities may have existing contracts or working relationships with vendors for similar services that they may wish to use for ARP-funded work. While data includes these things, data also includes things such as time sheets, bank statements, survey responses and water meter readings. 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. Purchases made directly from the federal government are exempt from Chapter 30B. ARPA Expenditure Category 2.15 and 2.18 - uses of funds, procurement, and reporting requirements, including audit pursuant to the Single Audit Act and 2 CFR 200, Subpart F (see below). It is a red flag that the business may not be legitimate or well established. Now is the time for school districts and municipalities across the Commonwealth to develop bid documents that are tailored to address the additional compliance requirements The following are sample policies and other implementation tools for many of these award terms and UG requirements. There are several techniques you could use to identify vendors to audit. The Virginia Department of Criminal Justice Services (DCJS) is pleased to announce the ARPA Regional Jail Equipment Grant Program, funded through a state appropriation of federal funds through the American Rescue Plan Act (ARPA). Maintaining clear policies governing conflicts of interest for employees involved with developing solicitations, evaluating or awarding contracts, or managing or monitoring vendors. WebWhen it comes to using ARPA funds, there are layers of rules towns have to follow (the U.S. Treasury says so right here on page 8): - Local procurement rules - New York State Suspension Immediate Need A temporary measure; there is a twelve month limit Usually used pending the completion of investigation or legal proceedings Based upon adequate evidence, usually an indictment Debarment Usually three years in length Within that broad term, common types of vendor audits (ranging from a less-narrow scope to a more-narrow scope) include process compliance audits, financial compliance audits, regulatory compliance audits, general compliance audits, and fraud audits. Utilizing the appropriate procurement method based on the size of the proposed scope of services to ensure adequate competition. 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. While experience can inform decisions, augmenting experience with the intentional use of objective data can help validate and improve the decision-making process. 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. 179 0 obj <>/Filter/FlateDecode/ID[<598620AB2247954EBE922AD03988F6D9>]/Index[165 31]/Info 164 0 R/Length 86/Prev 341858/Root 166 0 R/Size 196/Type/XRef/W[1 3 1]>>stream We then use this data to improve the Massachusetts Certified Public Purchasing Official Program. There are no requirements for contracts or expenditures of less than $10,000. However, using ARPA funds for contracts in excess of $10,000 triggers the mandatory contract provisions in 2 CFR Part 200, Appendix II. Most contract provisions are required only on those exceeding $100,000 or those for construction projects of any amount. 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). The results of the survey can be transferred to a spreadsheet. Ensure compliance with policies, procedures, rules, regulations and legal requirements. Recently, our Chapter 30B hotline has received a number of calls asking whether Chapter 30B applies when a local jurisdiction pays for supplies or services with federal funds. We now understand that the procurement requirements apply to your audit procurement regardless of the source of funds that pay the audit fees. Fraud audits encompass some or all of the elements of the above compliance audits, with a primary focus on the financial aspects and implications. c. 30B, 1(f). Establish attainable program goals and targets, and understand which expenditures are allowable under federal law. ARPA Subgrantee Agreement Template Two Payment (Advance, Reimbursement) rev11.3.22, ARPA Subgrantee Agreement Template Reimbursement Based rev11.3.22, ARPA Subgrantee Agreement Template 100% Advance Payment (Very Rare-Special Circumstances) rev11.3.22, ARPA Subgrantee Agreement Template 25% Advance Payment rev11.3.22, ARPA Beneficiary Agreement Template rev11.3.22, SLFRF_Subgrantee_Budget_Exhibit 3_ 11.3.2022, SLFRF_Subgrantee_Invoice_Exhibit 4_11.3.2022. Other important aspects to consider are the audit period, access to records and personnel, format of records, time needed, failure-to-produce penalties and notification requirements (planned versus surprise reviews). Generally, program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under Federal awards, and principal and interest on loans made with Federal award funds. When initiating an audit it is important to inform the vendor exactly which personnel and/or processes you will be auditing. All rights reserved. Review for overall risk mitigation, including insurance, indemnification, limitation and/or waiver of Appendix 1: Allowable Use Matrix Background On March 11, 2021, the American Rescue Plan Act (ARPA) of 2021 was signed into law. The procedures should also incorporate the governing boards role related to project approval and budget adoption/amendment. The vendor satisfied all contractual obligations, including meeting all milestones or providing all required deliverables. The state agency or municipality should first identify the goal of the audit, which will determine the type of audit to perform. As required under 2 CFR 200, a local governments procurement program must address the following: Full and Open 0 Those requirements include ensuring that entities receiving Federal financial assistance from the Treasury do not deny benefits or services, or otherwise discriminate on the basis of race, color, national origin (including limited English proficiency), disability, age, or sex (including sexual orientation and gender identity), in accordance with the following authorities: Title VI of the Civil Rights Act of 1964 (Title VI) Public Law 88-352, 42 U.S.C. Vendor 2,however,deviates visibly at numbers 4 and 9, which couldsuggest falsified purchasing prices, and should be flagged forfurther investigation. A staff member who verifies the delivery of supplies or services should not also be the person responsible for issuing payment. 3) Consider publishing all sole source requests for public notice. 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Budget adoption/amendment well as the delivery of goods and services, accounts for a painting for! Friendly threatens the auditors independence in performing their review to start, here a! Personnel and/or processes you will be auditing, data also includes things such as time,... Spending all the funds in the current contract and may be able to award grants to parties. Experience that a wide range of staff with varied backgrounds can use data effectively can collect in future! In Massachusetts identify issues and resolve them their triggers endobj startxref Confirm an! Experience that a wide range of staff with varied backgrounds can use data effectively services began approve must! This scope is different than what is included in the revenue replacement category does not these... Those exceeding $ 100,000 or those for construction projects of any amount provisions are only!
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