Finding Text
2025-004: Lack of Documentation of Suspension/Debarment Testing at Time of Procurement Federal Department: Department of Labor Assistance Listing #: 17.274 Internal Controls Material Weakness Category of Finding – Procurement, Suspension, and Debarment Criteria - In accordance with 2 CFR 200.213 and 2 CFR part 180, recipients of federal funds must not enter into covered transactions with parties that are suspended or debarred. The Uniform Guidance requires that entities verify the exclusion status of vendors or subrecipients by checking the System for Award Management (SAM) Exclusions list (https://sam.gov) prior to entering into a covered transaction. Documentation of this verification should be retained in the procurement file to demonstrate compliance. Additionally, the DOLYB grant agreements specifically require that Change Inc. determine whether any individual or entity receiving any portion of assistance is currently debarred, suspended, excluded, or disqualified by any Federal department or agency, and report any funds awarded to these individuals or entities to DOLYB within 30 days. Condition - During the audit, it was noted that Change Inc. has a written procurement policy consistent with Uniform Guidance, and most transactions under the YouthBuild program did not require formal suspension/debarment testing. However, during the year, the program used federal funds to acquire a van, which met the threshold for suspension/debarment testing. For this transaction, there was no documentation on file to demonstrate that the suspension/debarment check was performed at the time of purchase. The client subsequently ran the SAM.gov check during the audit, confirming the vendor was not suspended or debarred, but there was no evidence that this verification occurred prior to the purchase. Context – This was the only transaction identified during the audit period that met the requirements for suspension/debarment testing. All other transactions were below the threshold or otherwise not subject to this requirement. Cause - The lack of documentation appears to be due to oversight in the procurement process for this specific transaction, as the client’s written procedures were not followed for this purchase. Effect - Without documentation that the suspension/debarment check was performed at the time of procurement, and a review process ensuring this documentation occurred, there is an increased risk that federal funds could be expended with parties that are suspended or debarred and not report this information timely, resulting in potential noncompliance with federal regulations. Failure to report such a disbursement may result in required repayment of assistance received by Change Inc. and render Change Inc. ineligible to apply for additional assistance from DOLYB in future funding rounds. Questioned Costs - None identified, as the vendor was confirmed not to be suspended or debarred when checked during the audit. Recommendation - We recommend that the client ensure suspension/debarment checks are performed, reviewed, and documented at the time of procurement for all applicable transactions. Documentation, such as a dated screenshot or printout from SAM.gov, should be retained in the procurement file to demonstrate compliance with Uniform Guidance requirements. Auditee’s comments and response – Change Inc. developed an updated procurement policy that went into place July 1, 2024. Our Operations Manager did not follow the policy. This staff member is no longer with the organization. We have implemented new training for managers and directors about the procurement policy to ensure proper execution going forward. Responsible party for corrective action: Jill Johnson, Executive Director Repeat Finding: No