Audit 410372

Procurement, Suspension & Debarment Criteria – Title 2 U.S. Code of Federal Regulations (CFR) §180.300 requires non-Federal entities entering into covered transactions with lower-tier participants to verify that the entity is not suspended, debarred, or otherwise excluded from participating in Federal programs. Condition – The Utility did not verify whether vendors paid with Federal funds were suspended or debarred prior to entering into covered transactions. Cause – The Utility’s management was not aware of the requirement to verify vendors and contractors were not suspended or debarred from participating in federally funded programs. Effect – The Utility did not maintain documentation demonstrating compliance with Federal procurement requirements related to suspension and debarment. As a result, the Utility was not in compliance with Uniform Guidance procurement requirements. Recommendation – We recommend the Utility establish procedures to verify that vendors and contractors paid with Federal funds are not suspended, debarred, or otherwise excluded from participation in Federal programs. Verification should be performed through the System for Award Management (SAM) Exclusions website at SAM.gov and documentation of the verification should be retained. Response and Corrective Action Planned – The Utility is implementing procedures to verify vendors and contractors are not suspended or debarred by reviewing the SAM Exclusions listing available at SAM.gov and retaining documentation of the verification. Conclusion – Response accepted.

Single Audit Process Criteria – Title 2 U.S. Code of Federal Regulations (CFR) §200.501 requires a non-Federal entity that expends $1,000,000 or more in Federal awards during its fiscal year to obtain a Single Audit or program-specific audit conducted in accordance with Uniform Guidance. Condition – The Utility expended in excess of $1,000,000 in Federal awards during the year ended December 31, 2025. However, the Utility was not aware the expenditures triggered Single Audit requirements and had not arranged for a Uniform Guidance audit to be performed. Cause – The Utility did not have procedures in place to monitor Federal expenditures and evaluate whether Federal audit requirements were applicable. Effect – The Utility’s internal controls over compliance with Federal grant requirements were inadequate, increasing the risk of noncompliance with Uniform Guidance audit requirements. Recommendation – We recommend the Utility establish procedures to track Federal expenditures throughout the year and evaluate whether expenditures trigger Single Audit requirements under Uniform Guidance. This evaluation should be completed and communicated to the auditors prior to the commencement of audit fieldwork. Response and Corrective Action Planned – The Utility will work to establish formal procedures for tracking Federal expenditures and determining whether those expenditures trigger additional audit requirements. Conclusion – Response accepted.