Finding Text
Identification of the Federal Programs: Assistance Listing Number: 21.027 Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: Department of the Treasury Federal Award Number: N/A Federal Award Year: FY 2025 Criteria or Specific Requirements: Non-federal entities must comply with the Suspension and Debarment compliance requirement, which prohibits entering into covered transactions with parties that are suspended, debarred, or otherwise excluded. Covered transactions include procurement contracts for goods and services under nonprocurement transactions (e.g., grants or cooperative agreements) that are expected to equal or exceed $25,000, or as specified in 2 CFR § 180.220. Additionally, all subawards to subrecipients are considered covered transactions, regardless of the award amount, unless exempt per 2 CFR § 180.215. To verify vendor eligibility, non-federal entities must confirm that lower-tier entities are not suspended, debarred, or excluded, as defined in 2 CFR § 180.995. This can be achieved through one of the following methods: 1. Checking the SAM: Use the SAM Exclusions database, managed by the General Services Administration (GSA), at SAM.gov. 2. Collecting a Certification: Obtain a certification directly from the entity confirming their eligibility to participate. 3. Including Contractual Clauses: Add a clause or condition to the transaction that requires the entity to comply with suspension and debarment requirements. Identified Condition: During the audit, the City was unable to provide evidence demonstrating that vendor eligibility was verified prior to contract execution for all eight vendors selected for testing. The absence of such documentation raises concerns regarding compliance with the suspension and debarment requirements and highlights the need for strengthened internal controls over vendor verification processes. Cause: The issue occurred due to significant staff turnover within the department, which resulted in gaps in institutional knowledge and inconsistent application of required vendor verification procedures. As responsibilities transitioned between personnel, key steps in the suspension and debarment verification process were not consistently performed or documented. The lack of continuity and insufficient training for new staff contributed to the failure to maintain adequate supporting documentation demonstrating vendor eligibility prior to contract execution. Effect: The absence of required documentation increases the risk that contracts may have been awarded to ineligible or suspended parties, which could result in questioned costs or other compliance findings. Additionally, the lack of consistent verification practices, exacerbated by staff turnover, indicates weaknesses in internal controls over procurement and vendor management, reducing assurance that Federal funds are being administered in accordance with program requirements. Questioned Costs: None Recommendation: As this issue has been noted in prior audit periods, the City should take steps to remediate deficiencies in its suspension and debarment verification process. The City should implement alternative verification procedures, such as obtaining vendor certifications or including compliance clauses in contracts, when vendors are not listed in SAM. Staff should receive training on suspension and debarment requirements and acceptable verification methods to promote consistent application across departments. The City should also develop formal written policies outlining required verification steps, including procedures for vendors not registered in SAM, and strengthen monitoring and oversight to ensure these procedures are followed. Finally, the City should maintain complete documentation of all verification efforts to demonstrate compliance during audits. These actions will help strengthen internal controls, reduce compliance risks, and support adherence to Federal suspension and debarment requirements. Views of Responsible Officials and Planned Corrective Action Plan: The Finance and Administration Department will create an internal policy requiring a copy of the SAM.gov search results for the vendor, including the date of the search, and store the documentation in the appropriate grant file. Further, the policy will require a sign-off process where the vendor payment cannot be finalized without a "Debarment Check Complete". The Finance and Administration Department will include quality control checks and perform regular internal audits of a sample of vendor files related to grants to check for the presence of the Suspension and Debarment Check. Personnel Responsible for Implementation: Meredith Elguira, Carol Molina, Ralston Turner Position of Responsible Personnel: Interim Community Development Director, Finance and Administration Director, Senior Finance Analyst Expected Date of Implementation: April 30, 2026