Audit 375917

Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Federal Agency: U.S. Department of Health and Human Services Federal Program: Certified Community Behavioral Health Clinic, ALN No. 93.696, Award Period 9/30/2023 – 9/29/2027 Compliance Requirement: Suspension and Debarment Repeat Finding: Yes, 2024-002 Condition: During our fiscal year 2024 testing of five covered transactions (all vendors), we noted that management was not able to provide supporting documentation that suspension and debarment procedures were performed before the start of the procurement activity. The same vendors were used in fiscal year 2025. Questioned Costs: None Context: For five of the five vendors tested for suspension and debarment, management was not able to provide the required supporting documentation showing proper procedures were taken to ensure the vendors were not suspended or debarred. KANZA confirmed that the SAM check had been done but the documentation was not maintained at the time of the check. Our 2025 testing revealed that the one new vendor selected for testing was verified as not suspended or debarred prior to payment to the new vendor. Criteria: 2 CFR 180.300 prohibits entities from contracting under covered transactions to parties that are suspended or debarred from doing business with the federal government. A contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. In order to comply with federal suspension and debarment requirements, KANZA can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. Cause: The grant was new to KANZA in fiscal year 2024 and requirements were not communicated to KANZA by the grantor. Effect: The finding indicates that there could be some process improvements in how contracts are reviewed, documented and maintained to provide evidence the compliance requirements are being met. Recommendation: We recommend that KANZA either obtain certifications from vendors stating their organization is not suspended, debarred, or otherwise excluded from participation in federal assistance programs or document the procedures performed to verify the vendor is not identified as suspended or debarred on the SAM website. We understand procedures have been implemented to address the recommendation since the 2024 audit.