FAC Explorer

Finding 1140828 (2024-002)

Material Weakness Repeat Finding
Requirement
I
Questioned Costs
-
Year
2024
Accepted
2025-06-11
Audit: 358507
Organization: Sanford (SD)
Auditor: Ernst & Young LLP

AI Summary

  • Core Issue: Vendor screening for suspension and debarment was not consistently performed before setting up new vendors, risking compliance with federal regulations.
  • Impacted Requirements: Non-compliance with 2 CFR 200.303, which mandates effective internal controls over federal awards, including vendor screening.
  • Recommended Follow-Up: Strengthen internal controls by ensuring vendor screenings are completed prior to setup and enforce segregation of duties for sole source justification approvals.

Finding Text

Procurement and Suspension and Debarment: Identification of the Federal Program; Federal Agency and Program Name, Assistance Listing # : U.S. Department of Defense, National Aeronautics and Space Administration, National Science Foundation U.S Department of Treasury, U.S. Department of Health and Human Services, Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement (RHC) 93.912 Research and Development Cluster (R&D) Various Substance Abuse and Mental Health Services Projects of Regional and National Significance (SAMHSA Project) Award Year: FY 2024 93.243 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment requirements: • For the New Vendor Setup process, we noted five instances out of 25 samples where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the system and procuring the goods/services. • Under the RHC program, for two of the three procurement transactions tested, we noted the requester and approver of the sole source justification form was the same individual. Cause: Sanford did not follow its policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system. In addition, Sanford did not require a separate individual to approve the sole source justification forms. Effect or Potential Effect: By setting up the vendor in the system prior to performing the vendor screening for suspension and debarment, Sanford could have potentially entered into a business transaction with suspended or debarred parties and paid for those costs using federal grant funding. Sanford did not comply with its policy by having appropriate personnel, in addition to the requester, review and approve the sole source justification forms. Questioned Costs: $0 Context: Sanford follows a consistent vendor setup process for setting up each new vendor in the system, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. We selected 25 new vendors that were set up in FY 2024 to verify that the suspension and debarment screening was performed prior to adding the vendors in the System and noted for five of these 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system. Although Sanford’s policy was not followed, vendors that were not screened for suspension and debarment prior to transacting with them were not used for any of the major federal programs in FY 2024. Under the RHC program, the two transactions for which the requester and the approver of the sole source justification form was the same individual totaled $56,551. Total procurement tested under the RHC program was $77,209. Total population subject to procurement was $77,209, which represents 5.42% of the total federal expenditures under the RHC program. The total federal expenditures for the RHC program for FY 2024 were $1,422,159. Identification as a Repeat Finding: Partial repeat finding of 2023–001. Recommendation: Management should strengthen its internal controls to ensure that the suspension and debarment screening is performed prior to adding the vendor in the System and entering into a business transaction with the vendor. Management should ensure that there is segregation of duties between the approver and requester of the sole source justification forms. Views of Responsible Officials: As it relates to the reliance on the third-party vendor that conducts suspension and debarment vendor searches, the third-party vendor provides Sanford a SOC (System and Organizational Controls) 2 Type II report annually over the effectiveness of its controls. This is reviewed by Sanford’s compliance department to ensure that there are no findings that would be of concern to Sanford’s reliance on the vendor transaction. Considering the third-party vendor is not relied upon for financial controls, the third-party vendor does not have a SOC 1 (System and Organization Controls) report and, therefore, did not provide this level of report to Sanford. Prior to this year’s review, in November 2024, Sanford enhanced its operating procedures and began documenting a monthly validation of the suspension and debarment search results performed by the third-party vendor. These preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to the vendors that are suspended or debarred. Sanford believes the risk of any material disbursement to suspended and debarred vendors is effectively mitigated through existing preventive and detective internal controls. During the review, there were five instances out of 25 samples where suspension and debarment were not performed prior to vendor setup. None of those vendors were associated with the programs funded with federal funds. In addition, there were no instances where the suspension and debarment search was not performed after the enhanced operating procedures were implemented in November. As it relates to the procurement of goods and services, Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for procurement. Sanford believes the risk of any material disbursement subject to procurement is effectively mitigated through existing preventive and detective internal controls. To provide context on the scale of sole source procurement, the two transactions for which the requester and the approver of the sole source justification form was the same individual totaled $56,551. The total federal expenditures for the RHC program for the fiscal year ended December 31, 2024, were $1,422,159. Total procurement tested under RHC program was $77,209. Total population subject to procurement was $77,209, which represents 5.42% of the total federal expenditures under the RHC program. Sanford has revised its internal procedures to strengthen controls for sole source justification and documentation.

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 564337 2024-001
    Material Weakness
  • 564338 2024-002
    Material Weakness Repeat
  • 564339 2024-002
    Material Weakness Repeat
  • 564340 2024-002
    Material Weakness Repeat
  • 564341 2024-002
    Material Weakness Repeat
  • 564342 2024-002
    Material Weakness Repeat
  • 564343 2024-002
    Material Weakness Repeat
  • 564344 2024-002
    Material Weakness Repeat
  • 564345 2024-002
    Material Weakness Repeat
  • 564346 2024-002
    Material Weakness Repeat
  • 564347 2024-002
    Material Weakness Repeat
  • 564348 2024-002
    Material Weakness Repeat
  • 564349 2024-002
    Material Weakness Repeat
  • 564350 2024-002
    Material Weakness Repeat
  • 564351 2024-002
    Material Weakness Repeat
  • 564352 2024-002
    Material Weakness Repeat
  • 564353 2024-002
    Material Weakness Repeat
  • 564354 2024-002
    Material Weakness Repeat
  • 564355 2024-002
    Material Weakness Repeat
  • 564356 2024-002
    Material Weakness Repeat
  • 564357 2024-002
    Material Weakness Repeat
  • 564358 2024-002
    Material Weakness Repeat
  • 564359 2024-002
    Material Weakness Repeat
  • 564360 2024-002
    Material Weakness Repeat
  • 564361 2024-002
    Material Weakness Repeat
  • 564362 2024-002
    Material Weakness Repeat
  • 564363 2024-002
    Material Weakness Repeat
  • 564364 2024-002
    Material Weakness Repeat
  • 564365 2024-002
    Material Weakness Repeat
  • 564366 2024-002
    Material Weakness Repeat
  • 564367 2024-002
    Material Weakness Repeat
  • 564368 2024-002
    Material Weakness Repeat
  • 564369 2024-002
    Material Weakness Repeat
  • 564370 2024-002
    Material Weakness Repeat
  • 564371 2024-002
    Material Weakness Repeat
  • 564372 2024-002
    Material Weakness Repeat
  • 564373 2024-002
    Material Weakness Repeat
  • 564374 2024-002
    Material Weakness Repeat
  • 564375 2024-002
    Material Weakness Repeat
  • 564376 2024-002
    Material Weakness Repeat
  • 564377 2024-002
    Material Weakness Repeat
  • 564378 2024-002
    Material Weakness Repeat
  • 564379 2024-002
    Material Weakness Repeat
  • 564380 2024-002
    Material Weakness Repeat
  • 564381 2024-002
    Material Weakness Repeat
  • 564382 2024-002
    Material Weakness Repeat
  • 564383 2024-002
    Material Weakness Repeat
  • 564384 2024-002
    Material Weakness Repeat
  • 564385 2024-002
    Material Weakness Repeat
  • 564386 2024-002
    Material Weakness Repeat
  • 564387 2024-002
    Material Weakness Repeat
  • 564388 2024-002
    Material Weakness Repeat
  • 564389 2024-002
    Material Weakness Repeat
  • 564390 2024-002
    Material Weakness Repeat
  • 564391 2024-002
    Material Weakness Repeat
  • 564392 2024-002
    Material Weakness Repeat
  • 564393 2024-002
    Material Weakness Repeat
  • 564394 2024-002
    Material Weakness Repeat
  • 564395 2024-002
    Material Weakness Repeat
  • 564396 2024-002
    Material Weakness Repeat
  • 564397 2024-002
    Material Weakness Repeat
  • 564398 2024-002
    Material Weakness Repeat
  • 564399 2024-002
    Material Weakness Repeat
  • 564400 2024-002
    Material Weakness Repeat
  • 564401 2024-002
    Material Weakness Repeat
  • 564402 2024-002
    Material Weakness Repeat
  • 564403 2024-002
    Material Weakness Repeat
  • 564404 2024-002
    Material Weakness Repeat
  • 564405 2024-002
    Material Weakness Repeat
  • 564406 2024-003
    Significant Deficiency
  • 564407 2024-003
    Significant Deficiency
  • 564408 2024-004
    Material Weakness
  • 1140779 2024-001
    Material Weakness
  • 1140780 2024-002
    Material Weakness Repeat
  • 1140781 2024-002
    Material Weakness Repeat
  • 1140782 2024-002
    Material Weakness Repeat
  • 1140783 2024-002
    Material Weakness Repeat
  • 1140784 2024-002
    Material Weakness Repeat
  • 1140785 2024-002
    Material Weakness Repeat
  • 1140786 2024-002
    Material Weakness Repeat
  • 1140787 2024-002
    Material Weakness Repeat
  • 1140788 2024-002
    Material Weakness Repeat
  • 1140789 2024-002
    Material Weakness Repeat
  • 1140790 2024-002
    Material Weakness Repeat
  • 1140791 2024-002
    Material Weakness Repeat
  • 1140792 2024-002
    Material Weakness Repeat
  • 1140793 2024-002
    Material Weakness Repeat
  • 1140794 2024-002
    Material Weakness Repeat
  • 1140795 2024-002
    Material Weakness Repeat
  • 1140796 2024-002
    Material Weakness Repeat
  • 1140797 2024-002
    Material Weakness Repeat
  • 1140798 2024-002
    Material Weakness Repeat
  • 1140799 2024-002
    Material Weakness Repeat
  • 1140800 2024-002
    Material Weakness Repeat
  • 1140801 2024-002
    Material Weakness Repeat
  • 1140802 2024-002
    Material Weakness Repeat
  • 1140803 2024-002
    Material Weakness Repeat
  • 1140804 2024-002
    Material Weakness Repeat
  • 1140805 2024-002
    Material Weakness Repeat
  • 1140806 2024-002
    Material Weakness Repeat
  • 1140807 2024-002
    Material Weakness Repeat
  • 1140808 2024-002
    Material Weakness Repeat
  • 1140809 2024-002
    Material Weakness Repeat
  • 1140810 2024-002
    Material Weakness Repeat
  • 1140811 2024-002
    Material Weakness Repeat
  • 1140812 2024-002
    Material Weakness Repeat
  • 1140813 2024-002
    Material Weakness Repeat
  • 1140814 2024-002
    Material Weakness Repeat
  • 1140815 2024-002
    Material Weakness Repeat
  • 1140816 2024-002
    Material Weakness Repeat
  • 1140817 2024-002
    Material Weakness Repeat
  • 1140818 2024-002
    Material Weakness Repeat
  • 1140819 2024-002
    Material Weakness Repeat
  • 1140820 2024-002
    Material Weakness Repeat
  • 1140821 2024-002
    Material Weakness Repeat
  • 1140822 2024-002
    Material Weakness Repeat
  • 1140823 2024-002
    Material Weakness Repeat
  • 1140824 2024-002
    Material Weakness Repeat
  • 1140825 2024-002
    Material Weakness Repeat
  • 1140826 2024-002
    Material Weakness Repeat
  • 1140827 2024-002
    Material Weakness Repeat
  • 1140829 2024-002
    Material Weakness Repeat
  • 1140830 2024-002
    Material Weakness Repeat
  • 1140831 2024-002
    Material Weakness Repeat
  • 1140832 2024-002
    Material Weakness Repeat
  • 1140833 2024-002
    Material Weakness Repeat
  • 1140834 2024-002
    Material Weakness Repeat
  • 1140835 2024-002
    Material Weakness Repeat
  • 1140836 2024-002
    Material Weakness Repeat
  • 1140837 2024-002
    Material Weakness Repeat
  • 1140838 2024-002
    Material Weakness Repeat
  • 1140839 2024-002
    Material Weakness Repeat
  • 1140840 2024-002
    Material Weakness Repeat
  • 1140841 2024-002
    Material Weakness Repeat
  • 1140842 2024-002
    Material Weakness Repeat
  • 1140843 2024-002
    Material Weakness Repeat
  • 1140844 2024-002
    Material Weakness Repeat
  • 1140845 2024-002
    Material Weakness Repeat
  • 1140846 2024-002
    Material Weakness Repeat
  • 1140847 2024-002
    Material Weakness Repeat
  • 1140848 2024-003
    Significant Deficiency
  • 1140849 2024-003
    Significant Deficiency
  • 1140850 2024-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.558 Child and Adult Care Food Program $1.62M
93.859 Biomedical Research and Research Training $1.58M
93.399 Cancer Control $1.06M
93.RD National Cancer Institute $757,228
17.268 H-1b Job Training Grants $658,081
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $563,930
93.847 Diabetes, Digestive, and Kidney Diseases Extramural Research $441,761
93.121 Oral Diseases and Disorders Research $429,636
93.837 Cardiovascular Diseases Research $402,970
93.048 Special Programs for the Aging, Title Iv, and Title Ii, Discretionary Projects $395,084
93.376 Title: Multiple Approaches to Support Young Breast Cancer Survivors and Metastatic Breast Cancer Patients $380,157
93.575 Child Care and Development Block Grant $358,765
93.393 Cancer Cause and Prevention Research $328,668
93.734 Empowering Older Adults and Adults with Disabilities Through Chronic Disease Self-Management Education Programs – Financed by Prevention and Public Health Funds (pphf) $308,714
93.211 Telehealth Programs $298,878
93.242 Mental Health Research Grants $281,215
94.016 Americorps Seniors Senior Companion Program (scp) 94.016 $277,329
16.812 Second Chance Act Reentry Initiative $274,881
93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (sed) $271,861
93.217 Family Planning Services $256,987
93.788 Opioid Str $232,008
93.889 National Bioterrorism Hospital Preparedness Program $227,522
93.172 Human Genome Research $190,106
93.761 Evidence-Based Falls Prevention Programs Financed Solely by Prevention and Public Health Funds (pphf) $174,289
93.994 Maternal and Child Health Services Block Grant to the States $161,773
14.871 Section 8 Housing Choice Vouchers $150,329
12.420 Military Medical Research and Development $133,139
14.231 Emergency Solutions Grant Program $129,923
93.110 Maternal and Child Health Federal Consolidated Programs $124,919
93.136 Injury Prevention and Control Research and State and Community Based Programs $122,641
93.396 Cancer Biology Research $122,485
47.074 Biological Sciences $117,992
93.395 Cancer Treatment Research $117,735
93.865 Child Health and Human Development Extramural Research $110,265
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $104,265
14.157 Supportive Housing for the Elderly $90,954
16.834 Domestic Trafficking Victim Program $72,926
93.823 Public Health Response, Forecasting, and Analytic Capacities Related to Disease Outbreaks, Epidemics, and Pandemics $63,874
20.513 Enhanced Mobility of Seniors and Individuals with Disabilities $61,231
93.043 Special Programs for the Aging, Title Iii, Part D, Disease Prevention and Health Promotion Services $53,303
93.273 Alcohol Research Programs $51,887
97.008 Non-Profit Security Program $51,714
93.426 The National Cardiovascular Health Program $50,663
21.027 Coronavirus State and Local Fiscal Recovery Funds $45,096
16.758 Improving the Investigation and Prosecution of Child Abuse and the Regional and Local Children's Advocacy Centers $38,418
93.969 Pphf Geriatric Education Centers $36,302
10.331 Gus Schumacher Nutrition Incentive Program $30,585
93.350 National Center for Advancing Translational Sciences $27,784
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $26,059
93.080 Blood Disorder Program: Prevention, Surveillance, and Research $22,962
93.988 Cooperative Agreements for Diabetes Control Programs $22,500
93.898 Cancer Prevention and Control Programs for State, Territorial and Tribal Organizations $22,360
93.241 State Rural Hospital Flexibility Program $20,202
10.555 National School Lunch Program $18,681
93.855 Allergy and Infectious Diseases Research $18,419
93.758 Preventive Health and Health Services Block Grant Funded Solely with Prevention and Public Health Funds (pphf) $18,314
16.575 Crime Victim Assistance $16,888
20.616 National Priority Safety Programs $13,618
93.301 Small Rural Hospital Improvement Grant Program $13,382
20.509 Formula Grants for Rural Areas and Tribal Transit Program $12,916
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $10,690
93.365 Sickle Cell Treatment Demonstration Program $10,165
45.025 Promotion of the Arts Partnership Agreements $7,069
93.991 Preventive Health and Health Services Block Grant $7,007
93.800 Organized Approaches to Increase Colorectal Cancer Screening $6,881
93.069 Public Health Emergency Preparedness $6,342
10.557 Wic Special Supplemental Nutrition Program for Women, Infants, and Children $6,267
93.636 Aca - Reinvestment of Civil Money Penalties to Benefit Nursing Home Residents $5,485
12.750 Uniformed Services University Medical Research Projects $5,338
93.268 Immunization Cooperative Agreements $4,977
93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders $4,071
97.012 Boating Safety Financial Assistance $3,551
98.001 Usaid Foreign Assistance for Programs Overseas $2,584
16.589 Rural Domestic Violence, Dating Violence, Sexual Assault, and Stalking Assistance Program $2,481
93.982 Mental Health Disaster Assistance and Emergency Mental Health $2,177
93.669 Child Abuse and Neglect State Grants $2,086
93.310 Trans-Nih Research Support $1,801
43.008 Office of Stem Engagement (ostem) $1,652
93.391 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $543
93.RD Niaid Hiv and Other Infectious Diseases Clinical Research Support Services (crss) $-6,833