Audit 402971

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2025-001 Suspension and Debarment Federal Assistance Listing Numbers – 66.458 Federal Agency – U.S. Environmental Protection Agency Federal Program Title – Clean Water State Revolving Fund Cluster Award Period – 1/1/2025-12/31/25 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Compliance Requirement: Suspension and Debarment Condition: The District did not have proof that they verified vendors and subrecipients were not suspended or debarred. Criteria: 2 CFR 200 states that nonfederal 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 nonprocurement 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). All nonprocurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Questioned Costs: Unknown Context: During testing, it was noted that the District did not retain supporting documentation for suspension and debarment. Cause: The District had staffing change over grant procurement. Effect: The District is not in compliance with suspension and debarment requirements. Vendors may be paid with federal funds that are suspended and debarred entities which would not be in compliance with the Uniform Guidance. Repeat Finding: New finding in 2025. Recommendation: We recommend the District review and update procurement policies for the entire District to ensure it meets the minimum requirements of 2 CFR 200 for all federal grants and establish a procurement process in order to ensure this policy is followed which includes adding language over suspension and debarment. Views of Responsible Officials: There is no disagreement with the finding. The District is working on reviewing policies and procedures and updating as necessary. Further, training will be available to all those involved in grants.