Finding 1218999 (2025-001)

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF TRANSPORTATION, PASSED THROUGH MINNESOTA DEPARTMENT OF TRANSPORTATION, HIGHWAY PLANNING AND CONSTRUCTION 2025-001 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Criteria – 2 CFR § 180 requires City of Prior Lake (the City) to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including suspension and debarment requirements applicable to the highway planning and construction grant. Condition – During our audit, we noted the City did not have sufficient controls in place within its highway planning and construction grant federal program to assure that it was not contracting for goods or services with parties that are suspended or debarred, or whose principals are suspended or debarred from participating in contracts involving the expenditures of federal program funds. Questioned Costs – None. Our testing did not indicate any instances of noncompliance with these requirements. Context – The City did not obtain the appropriate documentation for one of one vendor tested to ensure the vendor was not suspended or debarred from participation in federal program contracts. Repeat Finding – This is a current year finding. Cause – This was an oversight by city personnel. Effect – Noncompliance with the suspension and debarment requirements could result in the City expending federal funds with vendors that are not eligible to be parties to such transactions, which could be viewed as a violation of the award agreement. Recommendation – We recommend that the City review its internal control procedures relating to suspension and debarment for the highway planning and construction grant federal program. Internal controls over compliance for this area should include verification that any vendor with which the City contracts for goods or services exceeding $25,000 is not listed as suspended or debarred on the federal Excluded Parties List System website. View of Responsible Official and Planned Corrective Actions – The City agrees with the finding. The City will review and update its policies and procedures relating to suspension and debarment for its federal programs to ensure compliance with the Uniform Guidance in the future. The City has separately issued a Corrective Action Plan related to this finding.