Audit 384433

Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide government services to the extent COVID-19 caused a reduction in revenues collected, make necessary investments in water, sewer or broadband infrastructure, provide emergency relief from natural disasters or their negative economic impacts, fund projects eligible under certain programs administered by the U.S. Department of Transportation through three pathways and fund projects eligible under the programs established in Title I of the Housing and Community Development Act of 1974. In 2024, the County spent $2,278,781 in program funds for the provision of government services. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by checking for exclusion records in the U.S. General Services Administration’s System for Award Management (SAM.gov), obtaining a written certification from the contractor, or adding a clause or condition into the contract that states the contractor is not suspended or debarred. The County must verify this before entering into the contract or purchasing goods and services and must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Our audit found the County did not have controls to verify the one contractor we tested that it paid more than $25,000 in federal funds was not suspended or debarred from participating in federal programs before entering into a new contract. Instead, the County checks suspension and debarment only when it enters a new contractor into its system. We consider this internal control deficiency to be a material weakness that led to material noncompliance Cause of Condition The County did not dedicate sufficient time and resources to address the prior year finding before the current audit. Furthermore, not all staff were aware of the federal requirements for suspension and debarment, specifically regarding timing of the verification, and did not develop a process for ensuring the verification is performed before entering into the contract. Effect of Condition The County did not obtain a written certification from the contractor, insert a clause into the contract, or search for exclusion records on SAM.gov to verify the contractor it paid with federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. We subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning these costs. Recommendation We continue to recommend the County strengthen internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them.