Audit 410574

ALN and Title: 21.027 Coronavirus State and Local Fiscal Recovery Fund Federal Agency: U.S. Department of the Treasury Award Year: 2021 Condition: The City did not implement controls over reviewing vendors for suspension and debarment actions prior to entering into covered transactions. Criteria: 2 CFR 200.303(a) requires that Non-Federal entities receiving federal awards must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the Non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms of conditions of the Federal award. In addition, Non-Federal entities are subject to the regulations in 2 CFR 180, which restrict the City from entering into covered transactions for the purchase of goods or services with an entity that is suspended, debarred, or otherwise excluded from Federal contracting. Questioned Costs: None noted. Effect: The lack of controls around review of vendors for suspsension and debarment could result in contracts that are entered into with vendors who have been suspended or otherwise excluded from Federal contracting and are not eligible to participate in contracts paid from Federal funds. The costs of such contracts may be disallowed by Federal agencies, and other actions, including grant termination or suspension proceedings, can result. Cause: There is a lack of formal processes and policies in place to ensure compliance with the federal regulations that govern the City’s grants. Auditor’s Recommendation: The auditor recommends that the City implement formal processes to ensure compliance with federal regulations and grant requirements, including policies and procedures to document the review of vendors prior to engaging in contracts, for suspension and debarement. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding and acknowledges that while the City was verifying that vendors were not on the suspended or debarred listing, a formal documentation process was not in place to evidence that these verifications were completed prior to awarding contracts funded with federal awards. To address this finding, the City will retain documentation of all suspension and debarment checks (e.g., screenshots or system confirmations from SAM.gov) as part of the procurement file to demonstrate compliance with federal requirements. Responsible Official: Grant Administrator Anticipated Completion Date: June 30, 2027