1. How to Prevent Findings Part 2 Michigan State Police Emergency Management and Homeland Security Division Ms. Jackie Reese, Audit Unit Manager Mr. Richard Sheaffer, Auditor

2. http://www.michigan.gov/emhsd2 To discuss potential findings To identify grant requirements To provide solutions Objectives

3. http://www.michigan.gov/emhsd3 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

4. http://www.michigan.gov/emhsd4 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_requir ements_369178_7.pdf

5. http://www.michigan.gov/emhsd5 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.

6. http://www.michigan.gov/emhsd6 Requirement 2 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.)

7. http://www.michigan.gov/emhsd7 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.)

8. http://www.michigan.gov/emhsd8 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

9. http://www.michigan.gov/emhsd9 Requirement DHS 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.)

10. http://www.michigan.gov/emhsd10 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.

11. http://www.michigan.gov/emhsd11 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.

12. http://www.michigan.gov/emhsd12 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.

13. http://www.michigan.gov/emhsd13 Requirement 44 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.)

14. http://www.michigan.gov/emhsd14 Requirement 44 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.)

15. http://www.michigan.gov/emhsd15 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.)

16. http://www.michigan.gov/emhsd16 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.

17. http://www.michigan.gov/emhsd17 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

18. http://www.michigan.gov/emhsd18 Requirement 44 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.)

19. http://www.michigan.gov/emhsd19 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.

20. http://www.michigan.gov/emhsd20 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.)

21. http://www.michigan.gov/emhsd21 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

22. http://www.michigan.gov/emhsd22 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.)

23. http://www.michigan.gov/emhsd23 Requirements 44 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.)

24. http://www.michigan.gov/emhsd24 Contract Monitoring (cont.) Requirements 44 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

25. http://www.michigan.gov/emhsd25 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.)

26. http://www.michigan.gov/emhsd26 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.

27. http://www.michigan.gov/emhsd27 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.

28. http://www.michigan.gov/emhsd28 Questions???

29. http://www.michigan.gov/emhsd29 Contact Information Ms. Jackie Reese, Audit Unit Manager Phone: (517) 324-2330 Email: ReeseJ@Michigan.gov Mr. Richard Sheaffer, Auditor Phone: (517) 333-4624 Email: SheafferR@Michigan.gov