Finding Text
2023-006 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing Number: 21.027
Federal Grantor: U.S. Department of Treasury
Award No. and Year: 2021
Compliance Requirements: Procurement and Suspension and Debarment
Type of Finding: Material Weakness in Internal Control over Compliance
Criteria:
2 CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish
and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statues, regulations, and the terms and conditions of the Federal award.
Title 2 CFR Section 200.214 of the Uniform Guidance states that the City must comply with 2 CFR
part 180, which implements Executive Orders 12549 and 12689. The regulations in 2 CFR part
180 restricts awards, subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from or ineligible for participation in Federal assistance
programs or activities.
Per 2 CFR Section 180.300, when a non-Federal entity enters into a covered transaction with an
entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR
section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise
excluded from participating in the transaction. This verification may be accomplished by (1)
checking the System for Award Management (SAM) Exclusions maintained by the General
Service Administration (GSA) and available at https://www.sam.gov/SAM/, (2) collecting a
certification from the entity, or (3) adding a clause or condition to the covered transaction with
that entity.
Condition:
During our testing of the City’s provisions for procurement requirements under the COVID-19
Coronavirus State and Local Fiscal Recovery Funds, we noted for three (3) of four (4) contracts
selecting for testing there was no evidence that the City verified the entity was not suspended
or debarred or otherwise excluded from participating in the transaction, prior to entering the
contract.
Cause:
The City did not follow their policy to verify the information described in the condition prior to
entering the transactions.
Effect:
The City’s control was not consistently followed, which required verification of suspension or
debarment prior to entering the contract. Subsequent to entering into the contract,
management verified the vendors were not suspended or debarred.
Questioned Costs:
No questioned costs were identified as a result of our procedures.
Context/Sampling:
A nonstatistical sample of four (4) out of twelve (12) procurement contracts were sampled for
the COVID-19 Coronavirus State and Local Fiscal Recovery Funds.
Repeat Finding from Prior Year:
No
Recommendation:
We recommend the City adhere to their procurement procedures requiring the suspension or
debarment verification is performed prior to entering into a covered transaction.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.