Finding Text
Subject: 2025-002 Material Weakness and Noncompliance – Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness and Noncompliance – Procurement and Suspension and Debarment Criteria: In accordance with 2 CFR §200.214 and 2 CFR Part 180, the City is required to ensure that it does not enter into a covered transaction with a party that is suspended or debarred. Verification must be performed through one of the following: checking SAM.gov, collecting a certification, or adding a contract clause requiring compliance. Condition and Context: The City has a formalized procedure for verifying suspension and debarment status for covered transactions under the revenue loss category for the CSLFRF award but the verification process did not occur prior to payment of new vendors during 2025. All vendors paid through June 2025 were verified on June 26, 2025 and all vendors paid through December 31, 2025 were verified on January 26, 2026. Without advance verification, the City risks using federal funds to engage with ineligible vendors, which could result in questioned costs, repayment obligations to the federal government, or future audit findings that may impact continued federal funding. Cause and Effect: The City did not complete suspension and debarment verification prior to payment for each of the ten covered transactions tested, resulting in a material weakness of internal control over compliance and noncompliance with respect to the suspension and debarment requirements of the CSLFRF program and increased risk of using federal funds with ineligible vendors. This is a repeat finding of 2024-002. Recommendation: We recommend the City ensure suspension and debarment checks are performed on all CSLFRF transactions prior to payment to new vendors and documented appropriately. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and plans to implement a corrective action plan by December 31, 2026. City staff are in the process of updating internal policies to ensure the suspension and debarment checks are performed on all CSLFRF transactions prior to payment to vendors and documented appropriately.