FINDING 2024-001
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): Acct ID #00Bt000000165QAEAY,
Contract #64595, Contract #66522
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Significant DeficiencyRepeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2023-001.
Condition and Context
An internal control system, which would include segregation of duties, was not in place at the
County in order to ensure compliance with requirements related to the grant agreement and the
Procurement and Suspension and Debarment compliance requirement.
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 $7,093,582
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, 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.
We selected three covered transactions for testing. The County had procedures in place to verify
that persons and entities related to each of the covered transactions were not suspended, debarred, or
otherwise excluded; however, there was no review or approval process documented for us to verify that an
internal control system was designed and operating properly.
The lack of internal controls was systemic 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). . . ." Cause
After the prior audit, the County established procedures to include a suspension and debarment
clause in agreements and contracts, collect a certification from that person or entity, or check for exclusions
using the Sam.gov website. However, no internal control procedure was documented that a second person
had reviewed the procedure to ensure compliance.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County could not ensure the persons and entities paid with federal funds were eligible to participate in
federal programs. Any program funds the County would have used to pay contractors that had been
suspended or debarred would have been unallowable, and the funding agency could have potentially
recovered 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 vendors with covered transactions that are $25,000 or more, paid for completely or in part
with federal funds, are not suspended, debarred, or otherwise excluded from participating in federal
programs prior to entering 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 2024-001
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): Acct ID #00Bt000000165QAEAY,
Contract #64595, Contract #66522
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Significant DeficiencyRepeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2023-001.
Condition and Context
An internal control system, which would include segregation of duties, was not in place at the
County in order to ensure compliance with requirements related to the grant agreement and the
Procurement and Suspension and Debarment compliance requirement.
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 $7,093,582
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, 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.
We selected three covered transactions for testing. The County had procedures in place to verify
that persons and entities related to each of the covered transactions were not suspended, debarred, or
otherwise excluded; however, there was no review or approval process documented for us to verify that an
internal control system was designed and operating properly.
The lack of internal controls was systemic 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). . . ." Cause
After the prior audit, the County established procedures to include a suspension and debarment
clause in agreements and contracts, collect a certification from that person or entity, or check for exclusions
using the Sam.gov website. However, no internal control procedure was documented that a second person
had reviewed the procedure to ensure compliance.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County could not ensure the persons and entities paid with federal funds were eligible to participate in
federal programs. Any program funds the County would have used to pay contractors that had been
suspended or debarred would have been unallowable, and the funding agency could have potentially
recovered 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 vendors with covered transactions that are $25,000 or more, paid for completely or in part
with federal funds, are not suspended, debarred, or otherwise excluded from participating in federal
programs prior to entering any contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.