Audit 40129

2022-002 Significant Deficiency- I- Suspension and Debarment (Internal Control over Compliance) ALN 20.205 Highway and Construction Cluster United States Department of Transportation Passed through Texas Department of Transportation 2018 funding And ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds United States Department of Treasury 2021 Funding Criteria: 2 CFR 200.303(a) requires Non-Federal entities to establish and maintain effective internal controls over Federal awards. Such controls must include suspension and debarment compliance. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. To ensure this, entities must maintain records for verification that vendors are not suspended and debarred before any transactions occur. Condition: No documentation was available to support that verification of no suspension and debarment on sam.gov website was performed for five vendors. Cause: For ALN 20.205- The City verifies vendors only during the construction phase. However, vendors for the right of way phase were contracted during fiscal year 2022. For ALN 21.027- The City experienced turnover and did not maintain evidence of the verification at the time of purchase. Effect: Lack of a formal verification process may result in the City contracting with vendors who are suspended or debarred or otherwise excluded, which in turn could result in noncompliance and questioned costs. Perspective: While testing ALN 20.205, there was no evidence provided that two vendors were verified for suspension and debarment purposes. While testing ALN 21.027, there was no evidence provided that three vendors were verified for suspension and debarment purposes. There was a total of 12 vendors who aggregate payments were $25,000 or more. Per review of sam.gov during the audit, the above mentioned five vendors were not suspended or debarred and have no active exclusion records. Questioned Costs: N/ARecommendation: The City should implement a formal verification process to ensure that vendors are not suspended or debarred or on an exclusion lists before transacting with them for federally funded expenditures. Management Response: Management concurs with auditors? finding and recommendation. See corrective action plan on page 14.

2022-002 Significant Deficiency- I- Suspension and Debarment (Internal Control over Compliance) ALN 20.205 Highway and Construction Cluster United States Department of Transportation Passed through Texas Department of Transportation 2018 funding And ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds United States Department of Treasury 2021 Funding Criteria: 2 CFR 200.303(a) requires Non-Federal entities to establish and maintain effective internal controls over Federal awards. Such controls must include suspension and debarment compliance. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. To ensure this, entities must maintain records for verification that vendors are not suspended and debarred before any transactions occur. Condition: No documentation was available to support that verification of no suspension and debarment on sam.gov website was performed for five vendors. Cause: For ALN 20.205- The City verifies vendors only during the construction phase. However, vendors for the right of way phase were contracted during fiscal year 2022. For ALN 21.027- The City experienced turnover and did not maintain evidence of the verification at the time of purchase. Effect: Lack of a formal verification process may result in the City contracting with vendors who are suspended or debarred or otherwise excluded, which in turn could result in noncompliance and questioned costs. Perspective: While testing ALN 20.205, there was no evidence provided that two vendors were verified for suspension and debarment purposes. While testing ALN 21.027, there was no evidence provided that three vendors were verified for suspension and debarment purposes. There was a total of 12 vendors who aggregate payments were $25,000 or more. Per review of sam.gov during the audit, the above mentioned five vendors were not suspended or debarred and have no active exclusion records. Questioned Costs: N/ARecommendation: The City should implement a formal verification process to ensure that vendors are not suspended or debarred or on an exclusion lists before transacting with them for federally funded expenditures. Management Response: Management concurs with auditors? finding and recommendation. See corrective action plan on page 14.

2022-002 Significant Deficiency- I- Suspension and Debarment (Internal Control over Compliance) ALN 20.205 Highway and Construction Cluster United States Department of Transportation Passed through Texas Department of Transportation 2018 funding And ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds United States Department of Treasury 2021 Funding Criteria: 2 CFR 200.303(a) requires Non-Federal entities to establish and maintain effective internal controls over Federal awards. Such controls must include suspension and debarment compliance. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. To ensure this, entities must maintain records for verification that vendors are not suspended and debarred before any transactions occur. Condition: No documentation was available to support that verification of no suspension and debarment on sam.gov website was performed for five vendors. Cause: For ALN 20.205- The City verifies vendors only during the construction phase. However, vendors for the right of way phase were contracted during fiscal year 2022. For ALN 21.027- The City experienced turnover and did not maintain evidence of the verification at the time of purchase. Effect: Lack of a formal verification process may result in the City contracting with vendors who are suspended or debarred or otherwise excluded, which in turn could result in noncompliance and questioned costs. Perspective: While testing ALN 20.205, there was no evidence provided that two vendors were verified for suspension and debarment purposes. While testing ALN 21.027, there was no evidence provided that three vendors were verified for suspension and debarment purposes. There was a total of 12 vendors who aggregate payments were $25,000 or more. Per review of sam.gov during the audit, the above mentioned five vendors were not suspended or debarred and have no active exclusion records. Questioned Costs: N/ARecommendation: The City should implement a formal verification process to ensure that vendors are not suspended or debarred or on an exclusion lists before transacting with them for federally funded expenditures. Management Response: Management concurs with auditors? finding and recommendation. See corrective action plan on page 14.

2022-002 Significant Deficiency- I- Suspension and Debarment (Internal Control over Compliance) ALN 20.205 Highway and Construction Cluster United States Department of Transportation Passed through Texas Department of Transportation 2018 funding And ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds United States Department of Treasury 2021 Funding Criteria: 2 CFR 200.303(a) requires Non-Federal entities to establish and maintain effective internal controls over Federal awards. Such controls must include suspension and debarment compliance. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. To ensure this, entities must maintain records for verification that vendors are not suspended and debarred before any transactions occur. Condition: No documentation was available to support that verification of no suspension and debarment on sam.gov website was performed for five vendors. Cause: For ALN 20.205- The City verifies vendors only during the construction phase. However, vendors for the right of way phase were contracted during fiscal year 2022. For ALN 21.027- The City experienced turnover and did not maintain evidence of the verification at the time of purchase. Effect: Lack of a formal verification process may result in the City contracting with vendors who are suspended or debarred or otherwise excluded, which in turn could result in noncompliance and questioned costs. Perspective: While testing ALN 20.205, there was no evidence provided that two vendors were verified for suspension and debarment purposes. While testing ALN 21.027, there was no evidence provided that three vendors were verified for suspension and debarment purposes. There was a total of 12 vendors who aggregate payments were $25,000 or more. Per review of sam.gov during the audit, the above mentioned five vendors were not suspended or debarred and have no active exclusion records. Questioned Costs: N/ARecommendation: The City should implement a formal verification process to ensure that vendors are not suspended or debarred or on an exclusion lists before transacting with them for federally funded expenditures. Management Response: Management concurs with auditors? finding and recommendation. See corrective action plan on page 14.

2022-002 Significant Deficiency- I- Suspension and Debarment (Internal Control over Compliance) ALN 20.205 Highway and Construction Cluster United States Department of Transportation Passed through Texas Department of Transportation 2018 funding And ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds United States Department of Treasury 2021 Funding Criteria: 2 CFR 200.303(a) requires Non-Federal entities to establish and maintain effective internal controls over Federal awards. Such controls must include suspension and debarment compliance. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. To ensure this, entities must maintain records for verification that vendors are not suspended and debarred before any transactions occur. Condition: No documentation was available to support that verification of no suspension and debarment on sam.gov website was performed for five vendors. Cause: For ALN 20.205- The City verifies vendors only during the construction phase. However, vendors for the right of way phase were contracted during fiscal year 2022. For ALN 21.027- The City experienced turnover and did not maintain evidence of the verification at the time of purchase. Effect: Lack of a formal verification process may result in the City contracting with vendors who are suspended or debarred or otherwise excluded, which in turn could result in noncompliance and questioned costs. Perspective: While testing ALN 20.205, there was no evidence provided that two vendors were verified for suspension and debarment purposes. While testing ALN 21.027, there was no evidence provided that three vendors were verified for suspension and debarment purposes. There was a total of 12 vendors who aggregate payments were $25,000 or more. Per review of sam.gov during the audit, the above mentioned five vendors were not suspended or debarred and have no active exclusion records. Questioned Costs: N/ARecommendation: The City should implement a formal verification process to ensure that vendors are not suspended or debarred or on an exclusion lists before transacting with them for federally funded expenditures. Management Response: Management concurs with auditors? finding and recommendation. See corrective action plan on page 14.

2022-002 Significant Deficiency- I- Suspension and Debarment (Internal Control over Compliance) ALN 20.205 Highway and Construction Cluster United States Department of Transportation Passed through Texas Department of Transportation 2018 funding And ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds United States Department of Treasury 2021 Funding Criteria: 2 CFR 200.303(a) requires Non-Federal entities to establish and maintain effective internal controls over Federal awards. Such controls must include suspension and debarment compliance. Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. To ensure this, entities must maintain records for verification that vendors are not suspended and debarred before any transactions occur. Condition: No documentation was available to support that verification of no suspension and debarment on sam.gov website was performed for five vendors. Cause: For ALN 20.205- The City verifies vendors only during the construction phase. However, vendors for the right of way phase were contracted during fiscal year 2022. For ALN 21.027- The City experienced turnover and did not maintain evidence of the verification at the time of purchase. Effect: Lack of a formal verification process may result in the City contracting with vendors who are suspended or debarred or otherwise excluded, which in turn could result in noncompliance and questioned costs. Perspective: While testing ALN 20.205, there was no evidence provided that two vendors were verified for suspension and debarment purposes. While testing ALN 21.027, there was no evidence provided that three vendors were verified for suspension and debarment purposes. There was a total of 12 vendors who aggregate payments were $25,000 or more. Per review of sam.gov during the audit, the above mentioned five vendors were not suspended or debarred and have no active exclusion records. Questioned Costs: N/ARecommendation: The City should implement a formal verification process to ensure that vendors are not suspended or debarred or on an exclusion lists before transacting with them for federally funded expenditures. Management Response: Management concurs with auditors? finding and recommendation. See corrective action plan on page 14.