Audit 378442

2 CFR 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 CFR 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 CFR § 180.220. All nonprocurement transactions as defined in 2 CFR § 180.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR § 180.215. When a non-Federal entity enter 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. For contracts over $25,000, the Village shall confirm that the vendor is not debarred or suspended by either checking the Federal government's System for Award Management, which maintains a list of such debarred or suspended vendors at www.sam.gov; collecting a certification from the vendor; or adding a clause or condition to the covered transaction with that vendor. The Village did not have the proper internal controls in place to verify that all entities, with whom the Village had entered into covered transactions, had not been suspended or debarred. During testing of the State Local Fiscal Recovery Fund program, several instances were noted that had a payment to a vendor of more than $25,000 and there was no evidence the Village 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 the covered transaction in the State Local Fiscal Recovery Fund program during fiscal year 2024. Failing to have the appropriate controls in place 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 Village 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.

2 CFR 200.329(c)(1) states that non-federal entities may be required to submit performance reports at least annually but not more frequently than quarterly, using a form or format authorized by the Office of Budget and Management (OBM). Recipients must use the standard financial reporting forms or such other forms as may be authorized by OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the Federal awarding agency. Each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. Entities are required to submit a Project and Expenditure Report annually. Reported expenditures on the draw down reports for 2024 did not agree with supporting invoices paid by the Village. The Village, on two occasions, received monies prior to the bills being paid. Therefore, draws were being completed prior to the expenditures happening. Additionally, the Project and Expenditure report for 2024 which was due by April 30, 2025, was not submitted. By not properly filing the required reports, the Village is in noncompliance with the requirements set forth by the U.S. Department of Treasury. This could result in the Treasury not fully being aware of how the Village is utilizing the funding in determining if the Village is following other requirements and using the funding properly. The Village should add additional procedures or controls to ensure all components of reporting federal expenditures are accurately reported.

2 CFR § 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.320(b)(2) requires non-federal entities to have a written method for conducting technical evaluations of the competitive proposals receive and for selecting contract recipients. 2 CFR 200.319(d) requires non-federal entities to have written procedures for procurement transactions to ensure all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured and identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. The Village was awarded grant monies under the Uniform Guidance (UG); however, the Village did not establish formal written policies required by the UG for the sections listed above. To help ensure compliance with the Uniform Guidance requirements, the Village should establish and maintain timely updated policies and, more importantly, implement procedure as specified by UG requirements for all grant monies received. Any changes to the Village's policies should also be formally approved by Council and documented within the minutes.