Finding Text
Criteria: Federal requirements related to suspension and debarment require non-Federal entities to ensure that covered transactions are not entered into with parties that are suspended or debarred. Effective internal controls should be in place to verify and document vendor eligibility prior to entering into covered transactions and to evidence review of that determination. Condition/Context: The District did not have an effectively operating control to verify and document that vendors selected for federally funded procurements were not suspended or debarred prior to contracting or payment. Specifically, no documented review of suspension and debarment status was performed for the vendors tested, and there was no evidence of management review to ensure compliance with federal suspension and debarment requirements. Although the vendors tested were not suspended or debarred, the absence of a documented verification and review control indicates the client’s internal controls over compliance for suspension and debarment were not operating effectively. Effect: Without an effectively operating control to verify and document suspension and debarment status, the client is at increased risk of entering into covered transactions with ineligible vendors and being unable to demonstrate compliance with federal requirements. Although no instances of noncompliance were identified in the items tested, the control deficiency increases the risk that material noncompliance could occur and not be prevented or detected in a timely manner. Cause: The District had not established or implemented an effective control requiring personnel to perform, document, and retain evidence of suspension and debarment verification for vendors used in covered transactions involving federal funds. As a result, management did not have a process in place to consistently demonstrate compliance with suspension and debarment requirements. Recommendation: We recommend management implement and document a formal control requiring review of vendor suspension and debarment status before entering into covered transactions funded by federal awards. The control should include: verification through an appropriate source such as SAM.gov, documentation of the date of the review, vendor name, and review result, retention of that documentation in the procurement or vendor file and evidence of supervisory review or other monitoring to ensure the control is consistently performed. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding, see corrective action plan.