Finding Text
Criteria or Specific Requirements: In accordance with 2 CFR Part 180 and 2 CFR 200.214, non-Federal entities are prohibited from entering into covered transactions with parties that are suspended or debarred from participating in Federal programs. Prior to entering into a covered transaction, entities should verify that subrecipients are not suspended or debarred through SAM.gov, obtaining a certification from the subrecipient, or another method permitted by the regulations. Effective internal controls should be designed and implemented to ensure compliance with suspension and debarment requirements. Condition: The Organization did not maintain documented evidence demonstrating that suspension and debarment verification procedures were performed for covered transactions with vendors and subrecipients. Per inquiry with the Director of Finance and Operations, the Organization requires subrecipients to self-report their suspension and debarment status as part of the annual risk assessment process; however, the Organization does not perform or document independent verification procedures, such as reviewing SAM.gov, to confirm subrecipient eligibility. In addition, the Organization did not retain documentation evidencing that SAM.gov verification was performed prior to vendor selection, as management indicated such documentation had not previously been requested. Cause: Internal controls over suspension and debarment compliance were not designed and operating effectively to ensure that suspension and debarment verification procedures were independently performed and documented for covered transactions. Specifically, the Organization relied on self-certifications and informal verification procedures and did not maintain evidence demonstrating that suspension and debarment reviews were completed in accordance with Federal requirements. Effect: Failure to independently verify and document the suspension and debarment status of vendors and subrecipients increases the risk that the Organization could enter into covered transactions with ineligible entities, resulting in noncompliance with Federal requirements. Questioned Costs: Questioned costs were not identified. Perspective Information: During testing of suspension and debarment compliance, seven vendors and two subrecipients were selected for testing. The Organization was unable to provide documentation demonstrating that independent suspension and debarment verification procedures had been performed for the entities selected. As a result, we independently verified the suspension and debarment status of the vendors and subrecipients through SAM.gov and confirmed that none of the entities tested were suspended or debarred. No instances of noncompliance were identified. Repeat Finding: None. Recommendations: We recommend that management establish and document procedures requiring suspension and debarment verification for all covered transactions with vendors and subrecipients. Such procedures should include performing and retaining evidence of SAM.gov verification (or another method permitted by Federal regulations) prior to entering into covered transactions. Management should also incorporate supervisory review procedures to ensure suspension and debarment verifications are completed and documented in accordance with Federal requirements.