Finding Text
2025-002 Procurement, Suspension and Debarment - Compliance and Internal Control Finding – Material Weakness Federal Agency - U.S. Department of Treasury Federal Award Number - 21.027: Coronavirus State and Local Fiscal Recovery Funds Pass-Through Entity - Kansas Department for Aging and Disability Services Criteria Or Specific Requirement: In accordance with 2 CFR §200.318 through §200.327, non-federal entities are required to establish and maintain documented written procurement policies and procedures for purchases funded with federal awards. Additionally, pursuant to 2 CFR §180 and 2 CFR §200.214, non-federal entities are prohibited from contracting with or making covered transactions with parties that are suspended or debarred from participating in federal programs. The Uniform Guidance requires entities to verify that vendors are not suspended or debarred through SAM.gov or through other allowable methods and to maintain documentation supporting the verification. Condition: During testing of procurement transactions and vendor payments charged to federal programs, it was noted that the Organization did not perform or document suspension and debarment verification procedures prior to entering into covered transactions with vendors paid from federal awards. Additionally, the Organization was unable to provide evidence that competitive procurement methods, cost or price analyses, vendor selection procedures, or suspension and debarment reviews were consistently performed for federally funded purchases. Cause: Management has not established or implemented formal procurement policies and procedures designed to comply with Uniform Guidance procurement standards. In addition, management has not developed a process to perform and document suspension and debarment checks before executing contracts or making covered transactions funded by federal awards. As a result, internal controls over procurement and suspension and debarment compliance have not been designed, implemented, or monitored effectively. Effect: The lack of documented procurement procedures and suspension and debarment verification controls increases the risk that federal funds may be expended in a manner that does not comply with Uniform Guidance requirements. The Organization may inadvertently procure goods or services from suspended or debarred vendors, fail to obtain full and open competition, or otherwise incur expenditures that could be determined to be unallowable by federal awarding agencies. This deficiency could result in questioned costs, repayment of federal funds, increased monitoring by grantors, and damage to the Organization's reputation as a federal award recipient. For The Year Ended December 31, 2025 Questioned Costs: None. Context: A sample of procurement transactions and vendor disbursements charged to federal awards was tested. For all applicable transactions selected for testing, the Organization was unable to provide evidence of documented procurement procedures or suspension and debarment verification. No written procurement policy existed, and no evidence of SAM.gov searches or other allowable suspension and debarment verification methods was maintained. Identification As A Repeat Finding: No. Recommendation: We recommend that management develop, formally adopt, and implement written procurement policies and procedures that comply with the requirements of Uniform Guidance. The policies should address procurement methods, documentation standards, competition requirements, conflict-of-interest provisions, cost and price analysis requirements, and vendor selection procedures. In addition, management should establish controls requiring documented suspension and debarment verification through SAM.gov or other allowable methods before entering into covered transactions with vendors funded by federal awards. Evidence of all compliance procedures should be retained and reviewed by supervisory personnel. Views Of Responsible Officials: Management agrees with the findings and acknowledges that formal procurement and suspension and debarment procedures have not been established. Management intends to develop and implement written policies and procedures, provide staff training, and establish a vendor verification process designed to ensure compliance with Uniform Guidance procurement and suspension and debarment requirements.