Finding Text
FINDING 2023-001
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): ARPA 2021-2022
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-001.
Condition and Context
The County elected to receive the standard revenue loss allowance, allowing the County to claim
its total State and Local Fiscal Recovery Funds (SLFRF) allocation of $8,985,074 as revenue loss to use
for government services. As such, all SLFRF program funds were expended under the revenue loss eligible
use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards
under this eligible use category and that recipients' use of revenue loss funds would not give rise to
subrecipient relationships given that there is no federal program or purpose to carry out in the case of the
revenue loss portion of the award.
Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded
under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification
from that person, or adding a clause or condition to the covered transaction with that person. Due to the
Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the
County was only required to comply with suspension and debarment requirements related to covered
transactions.
Upon inquiry of the County, in order to review the procedures in place for verifying that an entity
with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded,
it was noted that the Board of County Commissioners approved the use of the Certification form at their
August 21, 2023 meeting. The Certification form is a vendor's or contractor's self-certification that they are
not suspended or debarred from participation in federal programs. Due to the timing of the implementation
of the Certification form, the majority of the applicable covered transactions entered into for the audit period
were procured or paid prior to implementation.
A population of 11 covered transactions totaling $2,934,371 for goods or services that equaled or
exceeded $25,000 paid from SLFRF funds during the audit period was identified. Documentation
supporting that the vendors suspension and debarment status was verified prior to payment was requested
for all 11 covered transactions. The results of our testing were as follows:
For 1 vendor, the County was able to provide appropriate documentation.
For 3 of the vendors, the County was able to provide signed certifications, but the
certifications were not obtained until after payment had been made.
For 7 of the vendors, the County did not verify the vendors' suspension and debarment
status prior to payment.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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 statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you do business is not excluded or disqualified. You do this
by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
The County was unable to provide documentation to demonstrate they checked the EPLS to verify
the contractors were not suspended or debarred prior to entering into the contracts. The County noted for
several contractors this was due to the timing of the prior audit and not implementing policies and
procedures until part way through the current audit period.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County cannot ensure the contractors paid with federal funds are eligible to participate in federal programs.
Any program funds the County used to pay contractors that have been suspended or debarred would be
unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the
provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in
the loss of future federal funding to the County.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County utilize their Certification form or one of the other
methods available prior to payment of all contractors that are paid $25,000 or more, all or in part, with
federal funds.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.