Finding 1056882 (2023-001)

Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires that when a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal 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 Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During testing of a sample of five vendors subject to the Association’s Suspension and Debarment controls, we noted three instances where there was a lack of evidence that the Association verified that the vendors were not suspended or debarred. Questioned Costs: None. Context: Three vendors, out of our sample of five, were found to have no evidence of verification that the vendor was not suspended or debarred. We did later verify that the vendors were not suspended or debarred. Cause: Per discussion with management and the outsourced compliance firm, the Association did verify that the vendors were not suspended or debarred; yet the documentation supporting such verification could not be located. As such, the Association could not demonstrate that verification procedures were performed. Effect: Without maintaining supporting evidence that suspension and debarment procedures were performed over all applicable vendors, the Association cannot support that the federally required procedures were performed and could potentially contract with vendors who are suspended or debarred, causing the Association to be out of compliance with regulations. Repeat Finding: Yes. Recommendation: We recommend that the Association maintain evidence of suspension and debarment procedures to support compliance with federal regulations and to ensure that all potential vendors are not suspended or debarred. Views of Responsible Officials: There is no disagreement with the audit finding.