Finding Text
Finding: This is a new finding relating to a significant deficiency in internal control over compliance in relation to the procurement suspension and debarment requirements of the above noted major federal program. Criteria: The 2025 Uniform Guidance compliance supplement issued by the Office of Management and Budget in November of 2025 outlines the period of performance compliance guidelines and requirements of the above noted major federal program. It states, “Recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in 42 USC sections 802(c) and 803(c) and Treasury's 2021 Interim Final Rule, 2022 Final Rule, and 2023 Interim Final Rule. As such, except as noted in the next paragraph, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. In July 2022, Treasury released SLFRF FAQ 13.15, which explains that only a subset of the requirements in Subparts D and E of the Uniform Guidance apply to recipients' use of award funds under the revenue loss eligible use category. The requirements of 2 CFR sections 200.318 through 200.327 are not included in the list of requirements applicable to such funds.” However, Subpart C of the Uniform Guidance 2 CFR section 200.214 states, “Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards.” Condition: As part of the current fiscal year audit, the Bid Ordinance and Charter of the Town were reviewed to determine if there were any documented internal control policies and procedures requiring the review and documentation of whether a vendor for goods and services which were being funded through federal award programs were either suspended or debarred from receiving or participating in federal awards. We were unable to find any documented internal control policies or procedures requiring a review for the suspension and debarment status of potential vendors for goods and services which were being funded through federal award programs. In addition, in relation to the project contracts entered into under the above noted major federal program a request was made for the backup documentation relating to the actual bid process that was followed such as copies of the request for bids, the bid specifications, the bids received and the actual approval of each bid. A request was also made relating to whether the bid process was waived for any of these project contracts and if such a waiver was made a copy of the meeting minutes of the Board of Selectmen of the Town approving such a waiver was requested. Part of the intent of requesting these bid related documents was to review the provided information to determine if any suspension and debarment review was made and documented. No information could be provided in relation to these requests. Questioned Costs: There are no questioned costs relating to this significant deficiency in internal control over compliance in relation to this procurement suspension and debarment finding. Context: The procurement suspension anddebarment compliance requirements relating to the above noted major federal programingeneral state that vendors who have been suspended or disbarred can not receive or participate in federal awards. We feel that not being able to provide some formof documentation showing that vendors for which goods or services were purchasedwith funds relating to the above noted major federal program were reviewed to determine if they were suspended or debarred from receiving or participating in federal awards indicates a significant deficiency in internal control over compliance in relation to the procurement suspension and debarment compliance requirement. Effect: During our review of the vendors being used in relation to the seven reported projects of the above noted major federal program, none were noted as being suspended or disbarred. However, the lack of adequate internal controls over these compliance requirements could provide an opportunity for noncompliance. Any funds found to have been paid to vendors who have been suspended or debarred from receiving or participating in federal awards could be required to be returned to the funding source. Cause: We were unable to determine why neither the provided bid ordinance or town charter included any internal controls relating to the review and documentation of the reviews of vendors in relation to their potential status of being suspended or disbarred from receiving or participating in federal awards. In addition, we did review certain contracts that were entered into in relation to the above noted major federal program and we were unable to find any references or clauses relating specifically to suspension and debarment. We were unable to determine why no references could be located within these reviewed contracts. Recommendation: We recommend that the Town more closely monitor vendors receiving and participating in federal award programs relating to procurement suspension anddebarment compliance requirements. In addition, we recommend that specific internal control policies and procedures be created, documented and implemented to ensure compliance in relation to all applicable procurement suspension and debarment requirements. Views of Responsible Officials: We have discussed this finding with our auditor and we do understand the importance of an adequate system of internal control policies and procedures relating to federal award program procurement suspension and debarment requirements. We do intend to review our bid ordinance and town charter, as time allows, to determine if any specific changes or modifications to these two documents should be made in relation to this compliance requirement.