Audit 369597

Significant Deficiency in Internal Control over Compliance – Suspension and Debarment New or Repeat: New. Criteria: In accordance with Title 2, Section 200.318 of the OMB Code of Federal Regulations, non-federal organizations are prohibited from contracting with parties that are debarred or whose principals are suspended or debarred from performing under a federal award. When a non-federal organization enters into a contract with a party for goods or services in an amount greater than $25,000, or enters into a subrecipient agreement irrespective of the award amount, the organization must verify that the entity and its principals are not suspended or debarred or otherwise excluded from participating in a federal award. The Goldbelt Heritage Foundation did not comply with the requirements as it relates to "Debarred and Suspended Parties." Condition: During the Suspension and Debarment compliance testing, one of the contractors selected only had a Memorandum of Agreement (MOA) which did not have the necessary certification. Per discussion with the current Finance Director, the Foundation did not have a screenshot from SAM.gov or another contract from this audit year that reflected the contractors exclusion status. Three more contractors were selected to determine if the Suspension and Debarment verifications were completed and this was a one-time occurrence, however, those three contractors all had the identical issue of only having MOA’s completed for them without the necessary certification and no other verification completed. Cause: The Goldbelt Heritage Foundation did not obtain the necessary certifications that the contractors/consultants are not suspended or debarred. Due to this agreement being executed prior to the current employment of the Finance Director as well as many of the current teams’ employment at the Foundation, she believes this contributed to the contract being an MOA, and not a traditional contract and thus the necessary certification was missed. Context and Effect: Not obtaining the proper evidence to ensure that a party is not debarred or suspended from doing work on a federal award could ultimately result in the Goldbelt Heritage Foundation entering into a vendor contract with an ineligible party. If payments are made to a vendor that is excluded from participating in a federal award, the Foundation may be required to return such funds to the Federal granting agency. Questioned Costs: None noted. Recommendation: The Federal agency recommends that debarred and suspended verification be accomplished through one of three methods. These methods include (1) checking the System for Award Management (SAM) Exclusions maintained by the U.S. General Services Administration, (2) collecting a separately executed certification from the entity, or (3) adding a clause or condition to the actual subgrant agreement with the contracting party. We recommend the use of option number 2 or 3 over option number 1 because it provides better assurance that not only is the Foundation permitted to participate in a federal award, but the principals are also permitted to work under a federal grant. Views of Responsible Officials: Management concurs with this finding.