FINDING 2023-003
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-003.
Condition and Context
The County elected to receive the standard revenue loss allowance, allowing the County to claim
its total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $9,273,712
as revenue loss to use for government services. The U.S. Department of the Treasury (Treasury) determined
that there are no subawards under this eligible use category and that recipients' use of revenue loss
funds would not give rise to subrecipient relationships given that there is no federal program or purpose to
carry out in the case of the revenue loss portion of the award.
Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded
under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification
from that person or entity, or adding a clause or condition to the covered transaction with that person or
entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise
to subawards, the County was only required to comply with suspension and debarment requirements
related to covered transactions.
Upon inquiry of the County's policies and procedures related to suspension and debarment
requirements, the County disclosed its process was for the County Auditor to ensure that the agreements
or contracts include language related to suspension and debarment. There were 18 covered transactions
for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit
period were identified. Of the 18 covered transactions, 3 were selected for testing. Each transaction was
examined to determine whether the County verified the suspension and debarment status of the vendor
prior to payment.
The first covered transaction, in the amount of $319,064, was made to a contractor for the design
development of the courthouse renovation. While the contract was reviewed and approved by a County
official, no suspension or debarment clause was present in the contract. No other method was used to
verify that the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from
participating in federal assistance programs or activities prior to payment.
The second transaction, in the amount of $1,259,834, was made to a contractor for renovation work
completed on the county jail. While the contract was reviewed and approved by a County official, no
suspension or debarment clause was present in the contract. No other method was used to verify that the
vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from participating in
federal assistance programs or activities prior to payment.
The third transaction, in the amount of $135,900, was made on the roof to replace a portion of the
renovation work completed on the county jail. While the contract was reviewed and approved by a County
official, no suspension or debarment clause was present in the contract. No other method was used to
verify that the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from
participating in federal assistance programs or activities prior to payment.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
After the last audit, the County established procedures to include a suspension and debarment
clause in agreements or contracts. However, the County did not amend agreements or contracts entered
into prior to the implementation of this policy.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County cannot ensure the contractors paid with federal funds are eligible to participate in federal programs.
Any program funds the County used to pay contractors that have been suspended or debarred would be
unallowable, and the funding agency could potentially recover them.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County strengthen its system of internal controls to
ensure that all covered transactions that are $25,000 or more, all or in part with federal funds, are not
suspended, debarred, or otherwise excluded from participating in federal programs prior to entering into
any contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-003.
Condition and Context
The County elected to receive the standard revenue loss allowance, allowing the County to claim
its total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $9,273,712
as revenue loss to use for government services. The U.S. Department of the Treasury (Treasury) determined
that there are no subawards under this eligible use category and that recipients' use of revenue loss
funds would not give rise to subrecipient relationships given that there is no federal program or purpose to
carry out in the case of the revenue loss portion of the award.
Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded
under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification
from that person or entity, or adding a clause or condition to the covered transaction with that person or
entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise
to subawards, the County was only required to comply with suspension and debarment requirements
related to covered transactions.
Upon inquiry of the County's policies and procedures related to suspension and debarment
requirements, the County disclosed its process was for the County Auditor to ensure that the agreements
or contracts include language related to suspension and debarment. There were 18 covered transactions
for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit
period were identified. Of the 18 covered transactions, 3 were selected for testing. Each transaction was
examined to determine whether the County verified the suspension and debarment status of the vendor
prior to payment.
The first covered transaction, in the amount of $319,064, was made to a contractor for the design
development of the courthouse renovation. While the contract was reviewed and approved by a County
official, no suspension or debarment clause was present in the contract. No other method was used to
verify that the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from
participating in federal assistance programs or activities prior to payment.
The second transaction, in the amount of $1,259,834, was made to a contractor for renovation work
completed on the county jail. While the contract was reviewed and approved by a County official, no
suspension or debarment clause was present in the contract. No other method was used to verify that the
vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from participating in
federal assistance programs or activities prior to payment.
The third transaction, in the amount of $135,900, was made on the roof to replace a portion of the
renovation work completed on the county jail. While the contract was reviewed and approved by a County
official, no suspension or debarment clause was present in the contract. No other method was used to
verify that the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from
participating in federal assistance programs or activities prior to payment.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
After the last audit, the County established procedures to include a suspension and debarment
clause in agreements or contracts. However, the County did not amend agreements or contracts entered
into prior to the implementation of this policy.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County cannot ensure the contractors paid with federal funds are eligible to participate in federal programs.
Any program funds the County used to pay contractors that have been suspended or debarred would be
unallowable, and the funding agency could potentially recover them.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County strengthen its system of internal controls to
ensure that all covered transactions that are $25,000 or more, all or in part with federal funds, are not
suspended, debarred, or otherwise excluded from participating in federal programs prior to entering into
any contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.