Finding Text
CRITERIA Under the Uniform Guidance, non-federal entities are prohibited from contracting with or making payments to parties that are suspended or debarred from participating in federal programs. Entities must verify vendor eligibility by performing the required suspension and debarment checks prior to entering into contracts or making payments under federal awards. CONDITION AND CONTEXT UHU did not consistently perform suspension and debarment screening procedures for vendors, suppliers, contractors, subrecipients, employees, and other parties paid with federal funds. During the fiscal year, payments were made without evidence that the required screening procedures were performed prior to disbursement. Although management indicated that screening was performed on an occasional basis, it was not applied consistently across all applicable transactions, and documentation to support such procedures was not retained. In addition, due to the lack of adequate tracking of expenditures by federal award and vendor within the accounting records, management was unable to provide a complete and reliable population of transactions subject to suspension and debarment requirements. As a result, sufficient information was not available to support the identification of applicable vendors and payments for testing purposes. CAUSE These deficiencies were due to the absence of policies, procedures, and controls to ensure that suspension and debarment screening is consistently performed, documented, and retained for all applicable parties prior to payment. In addition, UHU did not maintain an accounting structure capable of tracking expenditures by federal award and vendor, which limited management’s ability to identify the population of transactions subject to suspension and debarment requirements. EFFECT OR POTENTIAL EFFECT Failure to screen potential and current vendors, suppliers, contractors, subrecipients, employees, and other applicable parties increases the risk that federal funds may be inadvertently provided to individuals or entities that are suspended or debarred from participation in federal programs. In addition, due to the lack of adequate tracking of expenses by federal award, we were unable to obtain a complete and reliable population of vendors and transactions subject to suspension and debarment requirements. As a result, testing could not be effectively performed, and samples could not be selected to determine compliance with these requirements. This significantly limits the ability to verify compliance with the Uniform Guidance and increases the risk of undetected noncompliance, potential questioned costs, and regulatory consequences. RECOMMENDATION We recommend that UHU establish and implement formal policies, procedures, and internal controls to ensure that suspension and debarment checks are consistently performed for all applicable parties prior to entering into contracts or making payments using federal funds. These procedures should require that verification is performed through appropriate sources, documented, and retained as part of the organization’s records. Management should also strengthen controls over the tracking of expenditures by federal award and vendor within the accounting system to ensure that all transactions subject to federal compliance requirements can be readily identified. This will enable management to perform monitoring activities, support audit testing, and demonstrate compliance with the Uniform Guidance. Periodic reviews should be conducted to ensure that suspension and debarment procedures are being consistently applied and properly documented.