Audit 384927

2024-001 Verification of Suspension and Debarment (Material Weakness) Federal Agency: U.S. Department of Treasury Pass-through Agency: N/A Cluster/Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Passed-through Identification: N/A Compliance Requirement: Suspension and Debarment Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 180.300, recipients of federal funds are required to ensure that contractors, subcontractors, or vendors are not suspended or debarred from participating in federal programs before awarding any contract or procurement that exceeds $25,000. This verification must be conducted through the System for Award Management (SAM) or equivalent records. Condition: During our review of the Town’s suspension and debarment procedures, we identified six vendors that were subject to the required verification process. For six of these vendors, the Town did not provide evidence that it had performed a SAM.gov check, obtained a suspension and debarment certification from the vendor, or included the appropriate clause or condition in the vendor’s contract. Cause: The Town has not established or consistently implemented formal procedures to ensure compliance with suspension and debarment requirements when using federal funds. Effect: Failure to verify and document the suspension and debarment status of all vendors increases the risk of noncompliance with 2 CFR 180.300 and the terms of the grant agreement, potentially resulting in questioned costs, repayment of federal funds, or administrative findings during future audits or grant monitoring reviews. Questioned Costs: None identified. Although verification documentation was not available for review, there is no evidence that the vendors were suspended or debarred; therefore, no questioned costs are being reported. Identification as Repeat Finding: This is not a repeat finding from the prior year. Recommendation: We recommend that the Town strengthen its suspension and debarment procedures to ensure compliance with 2 CFR 180.300. Specifically, when federal funds are used and the transaction meets the $25,000 threshold, the Town should verify the vendor’s eligibility using one of the three allowable methods: (1) checking the SAM.gov website, (2) collecting a written certification from the vendor, or (3) including a suspension and debarment clause in the vendor’s contract. These procedures should be documented and consistently applied to all applicable transactions. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.