Audit 402817

U.S. Department of the Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds, Award Years: 2021, 2022 Criteria or Specific Requirement - Suspension and Debarment In accordance with 2 CFR 200.214, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. In accordance with 2 CFR Section 180.300, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred. Per 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e., auditee management) should establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our test work over suspension and debarment compliance requirements, we determined checks were not completed prior to entering into contracts for two out of two vendors selected for testing. Cause: The City's controls to ensure suspension and debarment checks on vendors receiving federal funds did not operate effectively. Effect or Potential Effect: Federal funds could be paid to entities that are suspended or debarred. Questioned Costs: None. Context: Two contracts for the years ended December 31, 2023, totaling approximately $320,000 and $220,000, respectively, were selected for testing suspension and debarment, and in both instances (2 of 2), the City did not check the vendor’s suspension and debarment status prior to purchase. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: N/A Recommendation: Policies and procedures should be modified to ensure that suspension and debarment checks are performed on vendors prior to making purchases with federal funds. Views of Responsible Official and Planned Corrective Action: Management is in agreement with the finding. The City will incorporate controls surrounding suspension and debarment to ensure the appropriate checks are performed prior to entering into covered transactions.