Finding Text
2024-003 Verification of Suspension and Debarment (Material Weakness)
Federal Agency: Department of Homeland Security
Pass-through Agency: N/A
Cluster/Program: Staffing for Adequate Fire and Emergency Response (SAFER)
Assistance Listing Number: 97.083
Passed-through Identification: EMW-2020-FF-00046
Compliance Requirement: Suspension and Debarment
Type of Finding:
Internal Control over Compliance – Material Weakness
Material Noncompliance
Criteria or Specific Requirement: In accordance with 2 CFR 180.300, recipients of federal funds are required to ensure that contractors, subcontractors, vendors, or persons are not suspended or debarred from participating in federal programs before awarding any contract or procurement that exceeds $25,000. This verification must be conducted through the System for Award Management (SAM) or equivalent records.
Additionally, the grant award letter explicitly required compliance with non-procurement suspension and debarment requirements, reinforcing the Town’s obligation to verify the eligibility status of individuals and entities receiving federal funds.
Condition: During our review of the Town’s suspension and debarment process, we noted that the Town hired firefighters for federally funded positions without verifying whether the employees were suspended or debarred prior to the execution of their contracts, as required by federal regulations and the grant’s terms. No evidence was provided demonstrating that the Town checked the SAM.gov website, collected a certification, or included a clause or condition for each employee.
Cause: The Town’s hiring procedures did not include a formalized step to verify the suspension or debarment status of employees hired under federally funded positions before their contracts were executed. Additionally, there was no established policy or internal control requiring verification through the System for Award Management (SAM), obtaining a self-certification from the employee, or incorporating a suspension/debarment clause in employment agreements. The absence of these procedures resulted in noncompliance with federal regulations and grant requirements.
Effect: Failure to verify the suspension or debarment status of federally funded hires increases the risk of noncompliance with 2 CFR 180.300 and the grant’s terms, potentially resulting in cost disallowance, repayment of federal funds, penalties, and heightened scrutiny from oversight agencies.
Questioned Costs: $1,025,583, which represents total amount paid in fiscal year 2024.
Identification as Repeat Finding: This is not a repeat finding from the prior year.
Recommendation: We recommend that the Town establish a formalized process to verify whether federal funds used for payroll are subject to non-procurement suspension and debarment requirements. If such a requirement applies, the Town must ensure compliance by implementing appropriate verification procedures before hiring individuals for federally funded positions.
To meet the requirements of 2 CFR 180.300, the Town should verify suspension and debarment status by either checking the SAM.gov database, obtaining a certification from the employee, or including a suspension and debarment clause in employment contracts requiring employees to certify their eligibility. Additionally, the Town should document compliance efforts for audit purposes and consider incorporating this requirement into its hiring policies and procedures to prevent future instances of noncompliance.
Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.