Finding 11513 (2023-001)

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Rural Health Care Services Outreach and Rural Emergency Hospital Technical Assistance Assistance Listing Number: 93.912 and 93.241 Federal Award Program Year: July 1, 2022 – June 30, 2023 Pass-Through Agency: None Pass-Through Number: None Type of Finding: • Significant deficiency in internal control over compliance • Other matter finding Criteria or Specific Requirement – Procurement, Suspension and Debarment: Pursuant to 31 CFR § 19.300, non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended and debarred or whose principals are suspended or debarred. The non-Federal entity must verify that the contracted entity is not suspended or debarred or otherwise excluded. In addition, pursuant to 2 CFR 200.303, which states in part, the non-Federal entity must establish and maintain an effective internal control over the Federal awards 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. Condition: The Organization could not provide support that it had reviewed the “List of Parties Excluded from Federal Procurement and Nonprocurement Programs” during their procurement procedures on a consistent basis. The Organization had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, detecting, and correcting, noncompliance. Questioned Costs: None Context: It was noted that the files selected for testing did not have documented evidence supporting that the Organization had determined that the contracted parties were not suspended or debarred. From a population of two files, one was selected for testing. Our sample was not intended to be statistically valid. Effect: The Organization was unable to support vendors were not suspended or debarred. Cause: Failure to maintain sufficient procurement records. Identification as a Repeat Finding: No Recommendation: We recommend that the Organization maintain adequate documentation to ensure compliance with the suspension and debarment requirement. This documentation could include a print out from the Excluded Parties List System maintained by the General Services Administration, collection of a certification from the contracted party, or adding a clause or condition to the covered transaction with the contracted party. Views of Responsible Officials and Planned Corrective Action: The Organization is aware of the compliance requirement and has implemented additional procedures, including certain of those identified in the recommendation above, to be able to support suspension and debarment processes are in place. Persons responsible for implementing: Gerry Egan, Finance Manager Anticipated completion date: Completed.