Audit 405957

Finding 2025-002 Significant Deficiency: Procurement and Suspension and Debarment – Control Finding ALN 21.027 – COVID-19 – Coronavirus State Fiscal Recovery Funds Federal Agency: US Department of Treasury Criteria Or Specific Requirement: The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing of procurement transactions subject to suspension and debarment requirements, we noted that management did not document that vendors were reviewed for suspension and debarment prior to entering into covered transactions. Although documentation of the control was not maintained, none of the vendors tested were listed as suspended or debarred at the time of the transactions. Cause: Management's procedures for documenting the performance of the suspension and debarment control were not consistently followed. Monitoring controls were not sufficient to ensure documentation was retained for all applicable procurements. Effect or Potential Effect: Suspension and Debarment provisions were met for two of the two contracts tested. Questioned Costs: None Context: Out of two contracts tested, both contracts did not include a suspension and debarment clause representing that the vendor is not suspended or debarred and that the vendor was not evaluated for suspension and debarment prior to allocating federal funds to the contract. Identification as a repeat finding: This is a first-time finding. Recommendation: We recommend that management strengthen its procurement control procedures by requiring documented evidence of the suspension and debarment verification for all applicable covered transactions before contracts are executed or purchases are made. Management should also implement supervisory review procedures to ensure the documentation is consistently maintained. Views Of Responsible Officials/Corrective Action: Management acknowledges the deficiency. The City has historically performed suspension and debarment verification as part of its contract review process prior to contract execution; however, documentation evidencing completion of the verification was not retained in the contract file. To strengthen this control, the City has implemented procedures requiring documentation of suspension and debarment verification for all federally funded contracts and grant-related procurements. Staff will retain a dated screenshot or other evidence of the System for Award Management (SAM.gov) search in each applicable contract file prior to contract execution. Additionally, the City's Procurement Policy was updated and approved by the City Council in October 2025 to further strengthen procurement procedures and federal grant compliance requirements. Finance staff will periodically review contract files to verify that the required documentation has been retained. Anticipated Completion Date: October 31, 2025 Contact Person: Nick Hawkins, Finance Manager