Condition:
The Organization covered transactions for goods and services that exceeded $25,000 during the
year. Prior to entering into the covered transactions, the Organization did not verify that the service
provider was not suspended, debarred, or otherwise excluded by the Federal Government.
Context:
The Organization made payments to four vendors for services and goods in excess of $25,000, per
vendor, during the period of the audit. Per our testing, the Organization did not have documentation
showing that prior to entering transactions with the vendors the Organization verified that the
vendors were not suspended or disbarred by the Federal Government. As part of our testing, we
verified that all four vendors were not suspended or disbarred.
Cause:
The Organization does not have a process in place to identify covered transactions or verify that
entities providing goods or services are not suspended or debarred.
Criteria:
The requirements for non-procurement suspension and debarment are contained in 0MB guidance
in 2 CFR Part 180, which implements Executive Orders 12549 and 12689,
"Debarment and Suspension;" federal awarding agency regulations in Title 2 of the CFR adopting/implementing the 0MB guidance in 2 CFR Part 180; program legislation; and the
terms and conditions of the award.
Effect:
The Organization entered into covered transactions without knowing if the entity was suspended
or disbarred from the transaction.
Recommendation:
We recommend that the Organization establish a written policy that identifies when the
Organization enters a covered transaction and the necessary steps to take prior to entering into
a covered transaction to verify that an entity is not suspended or disbarred.
Management Response:
Sigma Beta Xi, Inc. takes the findings of the Single Audit Report with the utmost seriousness,
particularly regarding the oversight in verifying the status of vendors against federal suspension
and debarment lists before engaging in covered transactions. We acknowledge the critical
importance of adhering to the guidelines set forth in 2 CFR Part 180, as per 0MB guidance, and
the necessity of ensuring that all transactions comply with federal standards to uphold the
integrity of our operations and the trust of our stakeholders.
In response to this finding, we wish to clarify and reinforce our commitment to due diligence and
compliance in all procurement activities. While we have existing conflict of interest policies
approved by our Board, which cover various aspects of vendor relationships, we recognize that
these policies did not explicitly address the verification process for suspension and debarment
status as required.
To address this gap and ensure full compl iance moving forward, we have undertaken the
following corrective actions:
1. Policy Enhancement: We have revised and expanded our conflict-of-interest policies to
include specific procedures for verifying the suspension and debarment status of potential
vendors before entering into covered transactions. This enhanced policy has been reviewed and
approved by our Board of Directors.
2. Vendor Verification Process: A formal vendor verification process has been established,
which includes:
- A mandatory check against the System for Award Management (SAM) database for all
potential vendors to ensure they are not suspended, debarred, or otherwise excluded from
participation in federal programs. - Documentation of the verification process, which will be retained in the vendor's file for audit
and review purposes.
3. Training and Awareness: We are implementing a comprehensive training program for all
staff involved in procurement and financial management to ensure they are familiar with the
updated policies and understand their responsibilities in maintaining compliance with federal
regulations.
4. Continuous Monitoring and Review: An annual review of our procurement policies and
practices will be instituted, including a focus on compliance with suspension and debarment
verification. This will ensure ongoing adherence to regulatory requirements and the
incorporation of best practices as they evolve.
5. Corrective Action Plan Documentation: A detailed record of the corrective actions taken,
including policy updates, training sessions conducted, and monitoring activities, will be
maintained as part of our commitment to transparency and accountability.
Sigma Beta Xi, Inc. is dedicated to not only rectifying the oversight identified in the audit but also
to strengthening our internal controls and processes to prevent future occurrences. We believe
these measures will enhance our operational integrity, ensuring that we continue to serve our
community effectively and in compliance with all applicable laws and regulations. Our
commitment to excellence, accountability, and positive community impact remains unwavering,
and we view this experience as an opportunity for growth and improvement.