Finding 1131960 (2024-002)

Item 2024-002 – Suspension and Debarment U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds Listing #21.027 Year Ended September 30, 2024 Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Non‐Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. Condition – Adequate controls were not in place to provide for proper review of covered transactions for suspension and debarment. Covered transactions, over $25,000 paid with grant funding were not reviewed for suspension and debarment. Cause – The City lacked sufficient controls to ensure evidence of compliance with suspension and debarment. Questioned Costs – None noted Effect – Failure to properly verify that a potential vendor has not been suspended or debarred could result in unallowable expenditures and disallowed costs. Recommendation – We recommend that controls should be put into place to better monitor and document the compliance of vendors for suspension and debarment. Management’s Response – The City will implement additional controls to ensure there is evidence of review of covered transactions over $25,000 for suspension and debarment prior to payment. City’s Financial Officer will be responsible for the corrective action and anticipates completion of corrective action will be taken before September 30, 2025.