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****PRELIMINARY AND TENTATIVE FINDINGS****
<br />Finding No. 9: Competitive Selection
<br />The FMPA's Purchasing Policy, as part of the 1711PA Po/icy and Employee Manua/ (Manual) establishes thresholds for
<br />the purchase of goods and services as follows: purchases with a value above $1,000 and below $5,001 require a
<br />minimum of three quotes obtained via the internet, e-mail, written, or verbal communication (verbal requires
<br />documentation); purchases with a value above $5,000 and below $10,001 require three written quotes; and purchases
<br />with a value above $10,000 require three formal bids or proposals, unless less than three bids or proposals are
<br />received. In addition, purchases with a value above $25,000 require approval of the Executive Committee (for FMPA
<br />administrative and ARP transactions) or Board of Directors (for non -ARP transactions), as appropriate.
<br />\Ve reviewed 18 purchases of goods or services exceeding $1,001 during the period October 2012 through June 2014
<br />for compliance with FMPA's Purchasing Policy and noted the following:
<br />y For four purchases above $1,000 and below $5,001, consisting of furniture repairs, an ice machine purchase,
<br />Christmas tree decoration and rental, and embroidered jackets, FMPA records did not evidence that three
<br />quotes were obtained. The FMPA obtained one quote for each of the first three items and FMPA records
<br />did not evidence proper justifications for not obtaining the required three quotes for these purchases. The
<br />FMPA did not obtain any quotes for the fourth item, which FMPA personnel indicated was a sole source
<br />purchase; however, it was not evident why jacket embroidery would entail a sole source exemption.
<br />Y For a purchase above $5,000 and below $10,001, a hotel for a holiday party, FMPA records did not evidence
<br />that three written quotes were obtained or proper justification for not obtaining the required three written
<br />quotes.
<br />Y For a purchasing arrangement, exceeding $10,000 annually but not $25,000 annually, for break room supplies,
<br />only one proposal was obtained. FMPA records did not evidence proper justification for not obtaining the
<br />required three bids or proposals.
<br />Y During the period October 2012 through June 2014, the FMPA expended $189,062 for financial audit
<br />services. The contract, dated May 8, 2009, with the FMPA's financial statement auditors was for the 2008-09,
<br />2009-10, and 2010-11 fiscal years with optional renewals for the 2011-12 and 2012-13 fiscal years. The
<br />FMPA Accounting and Internal Controls Policy Section 5.2 provides that no audit firm shall be selected for
<br />more than a five-year term with two additional one-year optional extensions. However, the FMPA Board, at
<br />its April 17, 2014, meeting voted to accept the recommendation from the Audit Risk Oversight Committee
<br />and "deviate from the Accounting and Internal Controls Policy" and the FMPA's Purchasing Policy and
<br />issued a new contract for an additional three years with two optional renewals, expiring with the 2017-18
<br />fiscal year audit. Failure to follow established competitive selection processes increases the risk that the
<br />FMPA will not acquire goods and services at the lowest cost consistent with acceptable quality.
<br />Recommendation: The FMPA should ensure that goods and services purchased through contractors are
<br />competitively procured in accordance with established policies and procedures.
<br />Finding No. 10: Selection of Bond Professionals
<br />Governments typically employ a number of professionals to assist them in the bond issuance process; primarily a
<br />financial advisor, an underwriter, and bond counsel. Financial advisors can be used in determining the bond sale
<br />method and may have various other roles depending on which sale method is selected.' The prunary role of the
<br />underwriter in a negotiated sale is to market the issuer's bonds to investors. Assuming that the issuer and underwriter
<br />reach agreement on the pricing of the bonds at the time of sale, the underwriters are likely to provide ideas and
<br />s GF( )A Best Practice: Se/eeIing and Alanaging Municipal Advisory (2014)
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