Audit 402964

Finding: Item 2025-001 – Suspension and Debarment Significant Deficiency Federal Program – CDFI Equitable Recovery Program (CDFI ERP) AL Number – 21.033 Federal Award Numbers – 22ERP061009 Federal Agency – U.S. Department of Treasury Criteria: The CDFI ERP Assistance Agreement Section 5.10(d) requires the Recipient to determine whether any individual or entity receiving any portion of the CDFI ERP Award is currently debarred, suspended, excluded, or disqualified by the U.S. Department of the Treasury or any other Federal department or agency, as described in 31 C.F.R. Part 19. The Agreement further requires the Recipient to include in all procurement and nonprocurement contracts and agreements, between the Recipient and any individual or entity receiving any portion of the CDFI ERP Award, a representation that such individual or entity is not currently debarred, suspended, excluded, or disqualified by any Federal department or agency. Additionally, 2 CFR 200.214 requires non Federal entities to comply with suspension and debarment requirements and to ensure that covered transactions are not awarded to parties listed on the System for Award Management (SAM.gov) exclusion list. Condition/context: The Recipient did not include the required suspension and debarment representation in the loan agreement, promissory note, or other supporting documentation for the CDFI ERP funded loan. Further, the Recipient did not perform or document a verification in SAM.gov to verify that the loan recipient was not suspended, debarred, or otherwise excluded from participation in Federal programs. Cause: The Recipient did not have adequate internal controls or written procedures to ensure that suspension and debarment verifications were performed and that required representations were incorporated into CDFI ERP funded agreements. Effect: Without obtaining the required representations or verifying eligibility through SAM.gov, the Recipient increases the risk of providing Federal funds to an entity that is suspended, debarred, or otherwise excluded from Federal programs. This exposes the Recipient to potential noncompliance with Federal regulations and may result in questioned costs or other corrective actions by the awarding agency. Questioned cost: Not applicable. Repeat finding: Not applicable. Recommendation: The Recipient should update its policies and procedures to ensure compliance with CDFI ERP Assistance Agreement Section 5.10(d) and 2 CFR 200.214, including: • Performing and documenting suspension and debarment checks in SAM.gov prior to executing any agreement funded with CDFI ERP Award funds. • Incorporating the required suspension and debarment representation into all procurement and nonprocurement contracts, including loan agreements and promissory notes. The Recipient should perform a retrospective review of CDFI ERP funded transactions to determine whether additional corrective actions are necessary. View of responsible officials: Management's response is reported in "Corrective Action Plan" at the end of this report.