Audit 408226

Finding 2025-002 Type of Finding: Significant deficiency in control with Federal program requirements (Procurement and Suspension and Debarment) Repeat Finding: No Criteria: Under 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance further requires that, upon implementing the procurement standards, a nonfederal entity must have written procurement policies and procedures that reflect the procurement requirements in 2 CFR 200.317–.326, including methods of procurement, competition, and required contract provisions. In addition, for procurement transactions, nonfederal entities must ensure that contractors are not suspended or debarred or otherwise excluded from participation in federal assistance programs, typically by checking the System for Award Management (SAM.gov) or obtaining appropriate certifications, when procurement and suspension and debarment are applicable compliance requirements. Condition: For the year ended December 31, 2025, the Leadville Sanitation District did not have written procurement policies and procedures that incorporated the applicable Uniform Guidance procurement standards. In addition, for a sample of transactions subject to procurement tested under major federal programs, the District was unable to provide documentation demonstrating that it had verified vendors were not suspended or debarred when such verification was required. Upon further testing, we were able to verify that none of the vendors were suspended or debarred. Cause: The condition resulted from management not being aware that formalization and documentation of procurement policies and procedures in accordance with the Uniform Guidance and not implementing a consistent process for documenting suspension and debarment checks for covered transactions were required. Potential Effect: The lack of written procurement policies and procedures and the absence of documentation supporting suspension and debarment checks increase the risk that procurement transactions under federal programs may not comply with the Uniform Guidance procurement standards and suspension and debarment requirements. This could result in noncompliance with federal program requirements, potential disallowance of costs, or other remedial actions by federal agencies or pass-through entities. Questioned Costs: None. Recommendation: We recommend that the District (1) develop and formally adopt written procurement policies and procedures that align with the requirements of 2 CFR 200.317–.326, including provisions addressing procurement methods, competition, conflicts of interest, required contract clauses, and documentation requirements; and (2) implement and document procedures to verify and retain evidence that all contractors for covered transactions are not suspended or debarred, such as maintaining SAM.gov search results or equivalent documentation in the procurement files. We also recommend that management provide periodic training to staff involved in the procurement process regarding federal procurement and suspension and debarment requirements. Views of Responsible Officials: Management concurs with the finding and will implement controls to ensure that written procurement policies and procedures are developed and followed and that required suspension and debarment checks are documented for all covered procurement transactions under federal programs