Finding Text
AL 93.967 – Significant Deficiency – Procurement, Suspension and Debarment Criteria: In accordance with 2 CFR 200.206(d), non-federal entities are restricted from making contracts with parties that are debarred, suspended, or otherwise excluded from receiving federal awards or participating in federal. Condition: During our audit, we noted that KHDA did not review the debarment status of vendors prior to entering into a contract to purchase goods or services with those vendors. During the year ended June 30, 2025, KHDA spent approximately $1,058,004, with 3 vendors without performing a check on their debarment status. As part of the audit, we performed a debarment check and noted that the vendors had not been debarred. Cause: KHDA’s internal control system did not operate as designed to incorporate debarment status checks for vendors with which KHDA is spending significant amounts of federal grant funding. Effect: KHDA could enter into a contract with a party that has been debarred, suspended, or otherwise excluded from receiving federal awards or participating in federal awards Recommendation: We recommend that KHDA follow its internal control policy that requires that debarment status is checked prior to contracting with a party for the purchase of goods or services, and that records of the debarment check are stored in the vendor files. Management’s Response: Staff have been trained on the federal requirements and the organization has updated internal policies to reflect the compliance requirements. A Finance Committee has been formed to oversee federal compliance issues.