Audit 411326

Verification of Suspension and Debarment (Material Weakness) Federal Agency: U.S. Department of Homeland Security Pass-through Agency: New Hampshire Department of Safety Cluster/Program: Assistance to Firefighters Grant Assistance Listing Numbers: 97.044 Passed-through Identification: EMW-2021-FG-01051 Compliance Requirement: Suspension and Debarment Type of Finding: Internal Control over Compliance – Material Weakness Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 180.300, recipients of federal funds are required to ensure that contractors, subcontractors, and vendors receiving federal awards are not suspended or debarred from participating in federal programs prior to entering into covered transactions. For covered procurements exceeding $25,000, the non-federal entity must verify the eligibility of the contractor or vendor through the System for Award Management (SAM.gov), obtain a certification from the contractor or vendor, or include an appropriate suspension and debarment clause in the contract or agreement. Condition: During our review of the Town’s compliance with suspension and debarment requirements, we identified one vendor for which the Town was required to perform and document verification procedures. However, the Town was unable to provide evidence that it had completed the required verification for any of the four vendors tested. Specifically, the Town did not maintain documentation of a SAM.gov search, obtain a written suspension and debarment certificate from the vendors, or include the required suspension and debarment language within the applicable contracts or agreements. As a result, the Town did not maintain sufficient documentation to demonstrate that it had performed the required procedures to ensure that vendors receiving federal funds were eligible to participate in federally funded transactions. Cause: The Town has not established formal written procedures or implemented adequate internal controls to ensure that suspension and debarment verification requirements are identified, performed, and documented when applicable federal procurement transactions occur. Additionally, responsibility for performing and retaining documentation of these verification procedures has not been clearly defined within the Town’s procurement process. Effect: The absence of documented suspension and debarment verification procedures resulted in a lack of evidence that the Town complied with federal suspension and debarment requirements for applicable vendor transactions. Without adequate controls to verify and document vendor eligibility, the Town may not be able to demonstrate compliance with federal award requirements or support that federal funds were used only for allowable transactions with eligible vendors. Questioned Costs: None identified. Although the Town was unable to provide documentation demonstrating that suspension and debarment verification procedures had been performed at the time of our audit testing, subsequent to the audit, the Town performed verification searches through SAM.gov and confirmed that the vendor was not listed as suspended or debarred. Based on these subsequent procedures, there is no evidence identified that the vendor was ineligible to participate in federally funded transactions; therefore, no questioned costs are being reported. Identification as Repeat Finding: This is not a repeat finding from the prior year. Recommendation: We recommend that the Town strengthen its suspension and debarment procedures to ensure compliance with 2 CFR 180.300. Specifically, when federal funds are used for transactions exceeding the applicable threshold, the Town should establish procedures requiring verification of vendor eligibility through one of the allowable methods: (1) performing and retaining documentation of a SAM.gov search, (2) obtaining a written certification from the vendor, or (3) including suspension and debarment language in the contract or agreement. The Town should also establish responsibility for completing and retaining this documentation as part of its procurement process and implement a review process to ensure the required verification procedures are consistently applied and maintained for all applicable federal award transactions. Views of Responsible Officials: Management’s views and corrective action plan are included at the end of this report.