FAC Explorer

Finding 34747 (2022-006)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2022
Accepted
2023-07-23
Audit: 36865
Organization: City of McFarland (CA)
Auditor: Cliftonlarsonallen LLP

AI Summary

  • Core Issue: Three vendors received federal funds without following the required bid process, and debarment checks were not conducted for two of them.
  • Impacted Requirements: Compliance with Treasury's rules is crucial to ensure contracts are only made with non-debarred vendors.
  • Recommended Follow-Up: The City should establish procedures for procurement and debarment checks, along with training for procurement staff.

Finding Text

2022 ? 006 Federal agency: U.S. Department of Treasury Federal program title: Covid -19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: QCFVLPC1QNF1, FY 2021-2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2021, to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Condition: We noted three vendors received disbursements of Federal Funding without going through the bid process. In addition, debarment checks for two vendors were not performed. Criteria or Specific Requirement: Recipients may use award funds to enter into contracts with vendors who are not debarred to procure goods and services necessary to implement eligible purposes which are outlined by Treasury's Interim Final Rule. Effect: Without checking debarment before engaging services, the City could have entered into an agreement with a vendor that was disbarred from receiving federal funding. Context: Two of the four items tested did not have debarment procedures performed prior to the commencement of work. In addition the bid process wasn't followed for three of the items tested because expenditures had been previously approved within the City budget. Cause: State and Local Fiscal Recovery Funds related to the coronavirus relief funding was received in advance as emergency funding. The City did not follow all required compliance in using the funding in response to the emergency. Repeat Finding: This is not a repeat finding. Recommendation: CLA recommends that City implement procedures to ensure that federal guidance is followed relating to procurement and debarment. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with this finding. The City will provide additional training to individuals responsible for procurement and related debarment requirements.

Corrective Action Plan

2022-006 Significant Deficiency Covid - 19 American Rescue Plan Act ? Assistance Listing No. 21.027 Recommendation: CLA recommends that City implement procedures to ensure that federal guidance is followed relating to procurement and debarment. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: We acknowledge the audit finding relating to disbursements of the Covid-19 American Rescue Plan Act funds to vendors without going through the bidding process and the delayed debarment checks for two vendors. We recognize the severity of non-compliance with federal regulations and understand the need to enhance our internal controls to prevent similar issues in the future. To address this finding, we plan to undertake the following corrective actions: ? Review of Current Contracts: Immediate steps will be taken to review all existing contracts financed through the Covid-19 American Rescue Plan Act to ensure compliance with federal regulations. If any irregularities are found, they will be addressed promptly. ? Procedure Enhancement: Procedures related to procurement and debarment checks will be reviewed and strengthened to ensure they align with federal guidance. This will include an emphasis on performing debarment checks before the commencement of any work and adhering to the bidding process regardless of the urgency of the situation. ? Training: We will conduct comprehensive training sessions for all personnel involved in procurement and financial management. The training will focus on the importance of complying with federal regulations when utilizing federal funding, including procurement processes and debarment checks. ? Enhanced Oversight: An oversight mechanism will be established to ensure strict adherence to federal guidelines in the management of all federal funds. This mechanism will include regular audits and reviews to ensure that federal guidance on procurement and debarment is consistently followed. ? Policy Revision: We will revise our procurement policy to emphasize the importance of adhering to the bid process and conducting debarment checks before awarding contracts funded through federal awards. ? Improved Documentation: We will improve our record-keeping practices to document all actions related to procurement and debarment checks. This will enable us to provide evidence of compliance during any future audits. While the current finding reflects an oversight during an emergency response, we are committed to adhering to all requirements even under challenging circumstances. We appreciate the audit team's efforts to identify areas for improvement, and we will work diligently to rectify these issues. Name(s) of the contact person(s) responsible for corrective action: Diego Viramontes Planned completion date for corrective action plan: June 30, 2023

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 611189 2022-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
16.710 Public Safety Partnership and Community Policing Grants $779,696
14.239 Home Investment Partnerships Program $709,906
10.766 Community Facilities Loans and Grants $664,188
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $401,973
21.027 Coronavirus State and Local Fiscal Recovery Funds $345,295
20.205 Highway Planning and Construction $234,022