How to Prevent FindingsPart 2
Michigan State PoliceEmergency Management and Homeland Security Division
Ms. Jackie Reese, Audit Unit ManagerMr. Richard Sheaffer, Auditor
http://www.michigan.gov/emhsd 2
• To discuss potential findings
• To identify grant requirements
• To provide solutions
Objectives
http://www.michigan.gov/emhsd 3
How to Prevent Findings Review – 2011
Topics
• Suspension and Debarment
• Equipment Inventory
• Subrecipient Monitoring A-133
• Training and Exercise Attendance Records
• Support for Salaries and Wages
http://www.michigan.gov/emhsd 4
How to Prevent Findings Part 2
Topics• Professional Services• Dual Compensation• Conflict of Interest• Sole Source Procurement• Contract Monitoring
EMHSD Informational Bulletin 11-02 http://www.michigan.gov/documents/msp/compliance_with_grant_requirements_369178_7.pdf
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Professional Services
The Problem• An officer or employee of a unit of government
cannot provide professional services to the same unit of government and be paid with federal awards for the services performed.
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Requirement2 CFR Part 225, Attachment B(32) • Costs of professional services rendered by
persons who are members of a particular profession or posses a special skill, and who are not officers or employees of the governmental unit, are allowable…(Bolding added)
• http://cfr.vlex.com/vid/appendix-part-225-selected-items-cost-19597271
Professional Services (cont.)
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Solution• Regional Board and Fiduciary Agent must
ensure through policies and procedures or contract monitoring that there is not any procurement for services by officers or employees of the governmental unit.
Professional Services (cont.)
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The Problem• Employees of a unit of government that are
paid from a federal award are performing professional services for compensation outside of their regular governmental duties during paid leave time (annual leave, sick leave, other paid leave) resulting in dual compensation.
Dual Compensation
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RequirementDHS Grant Guidance• In no case is dual compensation allowable.
That is, an employee of a unit of government may not receive compensation from their unit or agency of government AND from an award for a single period of time (i.e. 1:00 PM to 5:00 PM) even though such work may benefit both activities.
Dual Compensation (cont.)
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Dual Compensation (cont.)Solutions• Regional Board (independently or through the
Fiduciary Agent’s unit of government) should have a Disclosure of Interest policy.
• Regional Board and Fiduciary Agent must ensure through policies and procedures that employees performing work outside of their governmental employment are not performing this service during any period (including leave time) that is compensated by a federal award.
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Dual Compensation (cont.)
Solutions• Regional Board and Fiduciary Agent must
have detailed documentation of all employees that perform professional services outside of their governmental duties for compensation, i.e. detailed payroll records that includes dates and times of the governmental work and work performed outside the governmental work.
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Conflict of Interest
The Problem• Any employee, member, or agent of a regional
planning board or any subcommittee thereof, may not participate in making decisions, approvals, disapprovals, recommendations, or rendering of advice on the use of federal grant money and personally benefit from the participation.
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Requirement44 CFR Part 13.36 (b) (3)• Grantees and subgrantees will maintain a
written code of standards of conduct governing the performance of their employees engaged in the award and administration of contracts.
• http://cfr.vlex.com/vid/13-36-procurement-19833982
Conflict of Interest (cont.)
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Requirement44 CFR Part 13.36 (b) (3)• No employee, officer or agent of the grantee or
subgrantee shall participate in the selection, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when: (i) The employee, officer, or agent, (ii) Any member of his immediate family, (iii) His or her partner, or (iv) An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm selected for award.
• http://cfr.vlex.com/vid/13-36-procurement-19833982
Conflict of Interest (cont.)
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Solutions• Regional Board should have a policy or
procedure regarding conflict of interest.• Regional Board and Fiduciary Agent must
ensure that personnel are trained about conflict of interest procedures.
• Regional Board and Fiduciary Agent must ensure that personnel, procurement, and purchasing policies are followed and personnel that have supplemental employment or financial interest in decisions may not participate in the process.
Conflict of Interest (cont.)
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Conflict of Interest (cont.)
Solutions• Regional Board and Fiduciary Agent should
actively perform contract monitoring to ensure that purchasing decisions are not conducted with a conflict of interest.
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Problems• Regional Boards and Fiduciary Agents are not
following federal requirements for non-competitive proposal (sole source) procurement of goods and services.
• Having a “Preferred Vendor Policy or Procedure” does not mean one can automatically choose any vendor. The Regional Board and Fiduciary Agent must follow federal, state, and local procurement procedures.
Sole Source Procurement
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Requirement44 CFR Part 13.36 (c) (4) (i)• Procurement by non-competitive proposals may be used only
when the award of a contract is infeasible under small purchase procedures, sealed bids, or competitive proposals and one of the following circumstances applies:○ The item is available only from a single source;○ The public exigency or emergency for the requirement will
not permit a delay resulting from competitive solicitation;○ The awarding agency authorizes noncompetitive proposals;
or○ After solicitation of a number of sources, competition is
determined inadequate.
http://cfr.vlex.com/vid/13-36-procurement-19833982
Sole Source Procurement (cont.)
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Sole Source Procurement (cont.)
Solution• When procuring goods or services by non-
competitive proposals (sole source), the Regional Board and Fiduciary Agent must do so in compliance with 44 CFR 13.36 (c) (4) (i), and the Regional Board and Fiduciary Agent must document the justification why non-competitive procedures were used.
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Solution
• Preferred Vendor policies or procedures are not recognized in the Code of Federal Regulations. The Regional Board and Fiduciary Agent must follow federal, state, and local procurement procedures.
Sole Source Procurement (cont.)
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Problem
• Lack of policies and procedures, internal controls, and an effective contract monitoring process may result in questioned costs and the repayment of grant funds.
Contract Monitoring
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Examples○ Lack of current contract○ Unclear or vague scope of work○ Lack of work product○ Extension of grant does not mean contract is
extended○ Non-compliance with federal, state, and local
procurement and purchasing procedures○ Lack of documented evidence that work was
performed, reviewed, meets scope of contract, and is approved prior to payment
Contract Monitoring (cont.)
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Requirements44 CFR 13.36 (b) (2)• Grantees and subgrantees will maintain a
contract administration system which ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.
• http://cfr.vlex.com/vid/13-36-procurement-19833982
Contract Monitoring (cont.)
http://www.michigan.gov/emhsd 24
Contract Monitoring (cont.)
Requirements44 CFR 13.36 (f)• Grantees and subgrantees must perform a
cost or price analysis in connection with every procurement action including contract modifications.
• http://cfr.vlex.com/vid/13-36-procurement-19833982
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Solutions
• Actively involve purchasing/procurement personnel in development of contract to ensure compliance with federal, state, and local purchasing/procurement rules and regulations.
• Develop policies and procedures specifically for contract monitoring.
Contract Monitoring (cont.)
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Contract Monitoring (cont.)
Solutions
• Review contracts on a frequent basis.• Develop a clear scope of work and clear,
understandable deliverables.• Identify personnel responsible for reviewing
work product and invoices, comparing work product to contract/purchase order, and authorizing payment of invoice.
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Contract Monitoring (cont.)
Solutions• Review and discuss work performance at
regular board meetings.• Follow federal, state, and local
purchasing/procurement rules and regulations regarding new or renewal contracts and sole source requirements.
• Maintain appropriate documentation.
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Questions???
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Contact Information
Ms. Jackie Reese, Audit Unit Manager
Phone: (517) 324-2330
Email: [email protected]
Mr. Richard Sheaffer, Auditor
Phone: (517) 333-4624
Email: [email protected]