Audit 373750

2 C.F.R. § 417.10 gives regulatory effect, as supplemented, to the United States Department of Agriculture for 2 C.F.R. 180. 2 C.F.R. § 180.305 states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135. 2 C.F.R. § 180.200 identifies “covered transactions” as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 C.F.R. § 180.220. All nonprocurement transactions as defined in 2 C.F.R. § 180.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 C.F.R. § 180.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/content/home); collecting a certification from the entity or adding a clause or condition to the covered transactions with that entity. The Tuscarawas County Metropolitan Sewer District did not have the proper internal controls in place to verify that all entities, with whom the Tuscarawas County Metropolitan Sewer District had entered into covered transactions, had not been suspended or debarred. During testing of procurement, suspension and debarment controls and compliance requirements for the Water and Waste Disposal Systems for Rural Communities AL #10.760, we noted one instance where the County had payments to a vendor of more than $25,000 and there was no evidence the Tuscarawas County Metropolitan Sewer District checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for one of the two contracts with covered transaction in the Water and Waste Disposal Systems for Rural Communities AL#10.760 during Fiscal Year 2024. Failing to implement appropriate controls may result in vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.

45 C.F.R. § 75.305(b) states for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Ohio Admin. Code 5101:9-7-03(B)(1) states the County Departments of Job and Family Services shall have cash management procedures in place to ensure the time elapsing between the receipt of funds and the disbursement of funds does not exceed a ten-day average for all federal funding. The days equivalent cash-on-hand for Tuscarawas County Job and Family Services averaged to 58 days per review of the CR 502 reports in 2024. Therefore, the cash on hand exceeded the allowable number of days by 48 for the year. The Tuscarawas County Job and Family Services should implement internal control procedures that would limit cash draws to amounts only immediately needed. Procedures should include, but are not limited to, a review of expenditures and requesting limited drawdowns that would ensure that cash on hand is expended within the ten-day requirement.