Finding Text
2024-003 Verification of Suspension and Debarment (Material Weakness) Federal Agency: Department of Treasury Pass-through Agency: New Hampshire Department of Environmental Services Cluster/Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Passed-through Identification: SPL-ARPA-029 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 contracted with a vendor related to a project in which the vendor contract exceeded $25,000. Upon review of the vendor, it was noted that the Town did not verify suspension and debarment status through the procedures noted above. Cause: Weaknesses in the formal documentation of internal controls. 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 terms of the grant agreement, potentially resulting in questioned costs, repayment of federal funds, or administrative findings during future audits or grant monitoring reviews. Questioned Costs: None identified. Although verification documentation was not available for the vendor, there is no evidence that the vendor was suspended or debarred; therefore, no questioned costs are being reported. Identification as Repeat Finding: This is not a repeat finding from the prior year. Recommendation: We recommend that the Town establish and formalize a process to verify and document the suspension and debarment status of all vendors, consultants, and contractors paid with federal funds. The process should include: • Performing verification through SAM.gov prior to contractor execution; • Obtaining a sign certification from the vendor; or • Including an appropriate clause within the contract addressing suspension and debarment status. Additionally, the Town should maintain documentation of verification in procurement files to demonstrate compliance during audits and monitoring visits. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.