Finding Text
FINDING 2024-002
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): FY2024
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2023-002.
Condition and Context
Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and
Local Fiscal Recovery Funds (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.
A population of two covered transactions was identified, and both were selected for testing. The
County had procedures in place to verify that the persons and entities related to each of the covered
transactions were not suspended, debarred, or otherwise excluded; however, there was no review or
approval process documented for us to verify that an internal control system was designed and operating
properly.
The lack of internal controls was a systemic issue 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). . . ."
Cause
Before the prior audit, the County had not designed or implemented policies and procedures to
verify that contractors were not suspended or debarred or otherwise excluded from participating in federal
programs. While these procedures were subsequently implemented, the individual who implemented the
procedures was not aware of the requirement to document a review or approval process.
Effect
Without a proper system of internal controls in place, material noncompliance could have gone
undetected. Material noncompliance with this requirement could have resulted in funds being disbursed to
vendors who were suspended or debarred from receiving federal funds. Any program funds the County
used to pay contractors that have been suspended or debarred would be unallowable and questioned costs,
and the funding agency could potentially recover the funds.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County establish a proper system of internal controls
to ensure that the current procedures in place are properly implemented for all persons and entities that
are paid $25,000 or more, all or in part with federal funds, to ensure they are not suspended, debarred, or
otherwise excluded from participating in federal programs.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.