Audit 412680

31 Code of Federal Regulations (CFR) § 19.305(a) states that non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Department of the Treasury grants an exception under 31 CFR § 19.120. 31 CFR § 19.200 identifies “covered transactions” as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 31 CFR § 19.220. Under 31 CFR § 19.210, all nonprocurement transactions as defined in 31 CFR § 19.970 (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 31 CFR § 19.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/content/home); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. The Village did not have the proper internal controls in place to verify that all entities, with whom the Village had entered into covered transactions, had not been suspended or debarred. During testing of procurement and suspension and debarment for the Coronavirus State and Local Fiscal Recovery Funds, we noted one out of two instances in which the program had a payment to a vendor of more than $25,000 and there was no evidence the Village checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the covered transaction in the Coronavirus State and Local Fiscal Recovery Funds during 2025. Failing to have the appropriate controls in place may result in vendors that are suspended or debarred receiving federal funds. Prior to contracting with vendors that will be paid with federal funds, the Village should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.