Audit 413610

2025-002 Finding – Federal Award Finding Type: Significant Deficiency in Internal Control over Compliance and Noncompliance – Procurement and Suspension and Debarment Identification of Federal Program: AL Number: 10.163 – Market Protection Program Criteria / Requirement: Non-federal entities are prohibited from contracting with parties that are suspended or debarred from doing business with the federal government per 2 CFR 200.14. When a non-federal entity enters into a contract they must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction. Condition / Context: During the audit, two procurements made during the year ending December 31, 2025 were tested. The testing showed that the Organization did have a Procurement Policy in place and was following their own guidelines for the procurements tested. However, the entities that were awarded the contracts were not verified to be not suspended or debarred from participating in the transaction due to federal funding. Retroactively, the names of the two entities were searched and confirmed not to be suspended or debarred from participating in the transactions. Cause: While procedures were in place to appropriately procure goods and services, there were no procedures in place to ensure that the awarded entity was not suspended or debarred from doing business with the federal government. Effect: The Organization could have entered into a contract with an entity that was prohibited from receiving federal funds, resulting in noncompliance of federal award requirements. Questioned Costs: None Recommendation: We recommend that the Organization implement the necessary internal controls to ensure that, for each procurement entered into using federal funds, the entity is verified or certified as not being suspended or debarred from participating in the transaction. This can be accomplished by searching the entity's name in the exclusions database at SAM.gov, obtaining a certification from the entity, or including a clause or condition related to suspension and debarment in the contract with the entity. Management’s Response: Management concurs with the finding and will implement effective internal controls to ensure that contracts utilizing federal funds are not awarded to entities that are suspended or debarred from the transaction.