Audit 15255

Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 59.077, U.S. Small Business Administration Federal Award Identification Number and Year: SBAHQ22CNP0003, Grant Period 12/01/2021-11/30/2023 Pass-through Entity - N/A Finding Type - Significant deficiency in internal control over suspension and debarment compliance Repeat Finding - No Criteria - Section 14 of the U.S. Small Business Administration grant agreement noted that the Hub cannot use project funds to pay salaries of employees or costs of consultants, contractors or other service providers where such entities are currently suspended or debarred. The Hub is responsible for verifying those entities paid or (where applicable) assisted with project funds or project resources are not suspended. To determine if an individual or firm is suspended or debarred, the Hub may consult the System for Award management (https://www.sam.gov/). Additionally, Section 14 of the grant agreement refer for further guidance regarding suspension and debarment to 2 CFR Part 180 and 2700. According to 2 CFR Part 180.300 covered transaction entered with a vendor/contractor at the next lower tier, USHCC must verify the vendor/contractor with whom USHCC intend to do business is not excluded or disqualified. USHCC do this by a) checking SAM exclusions, b) collecting a certification from that vendor/contractor, c) adding a clause or condition to the covered transaction with that vendor/contractor. Condition - During testing of suspension and debarment requirement for activities allowed/unallowed, allowed costs/cost principles and procurement compliances, it was noted that USHCC did not provide proof of evidence that verification for suspension and debarment was performed and maintained through the System of Award Management. USHCC provided an internal company generated memo which states that the federal requirements have been followed. However, the internal document does not rise to a sufficient and appropriate audit evident to demonstrate that USHCC consulted with System of Award Management as required by U.S. Small Business Administration. Identification of How Likely Questioned Costs Were Computed - N/A Know Questioned Costs - None - Upon review of the excluded parties listing as part of the audit process, it was determined that none of the parties that were awarded procurements were excluded parties. Context - USHCC hired contractors or vendors to provide goods or services with federal funding but did not have audit evidence that USHCC consulted with System of Award Management as required by U.S. Small Business Administration for any of the contractors or vendors. Effect - The effect of the finding is that failure to monitor suspension and debarment could cause funds to be disbursed to vendors or contractors who are not eligible to have goods purchased and services with federal monies. Cause - Management did not have sufficient documentation in place to ensure there is proper audit trail for the suspension and debarment compliance. Recommendation - We recommend internal control procedures should be strengthened and enforced to ensure that the appropriate suspension and debarment verifications are performed and maintained for all vendors or contractors providing goods and services.View of Responsible Officials and Corrective Action Plan – Management selected and presented contractors with proposals that were included in the original CNPP grant application and were approved by SBA prior to any disbursement of funds. Management also contemporaneously signed a memo attesting that each and every contractor hired for the CNPP program was verified to be eligible to provide services with to be procured with federal funds. This verification was done in SAM.gov searching for exclusions but the related documentation (i.e. screenshots) was not saved. However, Management has already updated its internal controls beginning of 2023 and now maintains each screenshot of suspension debarment verification performed in SAM.gov.

Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 59.077, U.S. Small Business Administration Federal Award Identification Number and Year: SBAHQ22CNP0003, Grant Period 12/01/2021-11/30/2023 Pass-through Entity - N/A Finding Type - Significant deficiency in internal control over suspension and debarment compliance Repeat Finding - No Criteria - Section 14 of the U.S. Small Business Administration grant agreement noted that the Hub cannot use project funds to pay salaries of employees or costs of consultants, contractors or other service providers where such entities are currently suspended or debarred. The Hub is responsible for verifying those entities paid or (where applicable) assisted with project funds or project resources are not suspended. To determine if an individual or firm is suspended or debarred, the Hub may consult the System for Award management (https://www.sam.gov/). Additionally, Section 14 of the grant agreement refer for further guidance regarding suspension and debarment to 2 CFR Part 180 and 2700. According to 2 CFR Part 180.300 covered transaction entered with a vendor/contractor at the next lower tier, USHCC must verify the vendor/contractor with whom USHCC intend to do business is not excluded or disqualified. USHCC do this by a) checking SAM exclusions, b) collecting a certification from that vendor/contractor, c) adding a clause or condition to the covered transaction with that vendor/contractor. Condition - During testing of suspension and debarment requirement for activities allowed/unallowed, allowed costs/cost principles and procurement compliances, it was noted that USHCC did not provide proof of evidence that verification for suspension and debarment was performed and maintained through the System of Award Management. USHCC provided an internal company generated memo which states that the federal requirements have been followed. However, the internal document does not rise to a sufficient and appropriate audit evident to demonstrate that USHCC consulted with System of Award Management as required by U.S. Small Business Administration. Identification of How Likely Questioned Costs Were Computed - N/A Know Questioned Costs - None - Upon review of the excluded parties listing as part of the audit process, it was determined that none of the parties that were awarded procurements were excluded parties. Context - USHCC hired contractors or vendors to provide goods or services with federal funding but did not have audit evidence that USHCC consulted with System of Award Management as required by U.S. Small Business Administration for any of the contractors or vendors. Effect - The effect of the finding is that failure to monitor suspension and debarment could cause funds to be disbursed to vendors or contractors who are not eligible to have goods purchased and services with federal monies. Cause - Management did not have sufficient documentation in place to ensure there is proper audit trail for the suspension and debarment compliance. Recommendation - We recommend internal control procedures should be strengthened and enforced to ensure that the appropriate suspension and debarment verifications are performed and maintained for all vendors or contractors providing goods and services.View of Responsible Officials and Corrective Action Plan – Management selected and presented contractors with proposals that were included in the original CNPP grant application and were approved by SBA prior to any disbursement of funds. Management also contemporaneously signed a memo attesting that each and every contractor hired for the CNPP program was verified to be eligible to provide services with to be procured with federal funds. This verification was done in SAM.gov searching for exclusions but the related documentation (i.e. screenshots) was not saved. However, Management has already updated its internal controls beginning of 2023 and now maintains each screenshot of suspension debarment verification performed in SAM.gov.