FAC Explorer

Finding 39561 (2022-001)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2022
Accepted
2023-08-01
Audit: 34025
Organization: Sanford (SD)
Auditor: Ernst & Young LLP

AI Summary

  • Core Issue: Sanford's reliance on a third-party vendor for suspension and debarment checks lacks adequate validation controls, risking inaccurate results.
  • Impacted Requirements: Non-compliance with 2 CFR Section 200.303 and 200.213 due to insufficient documentation and controls over vendor checks.
  • Recommended Follow-Up: Implement validation controls for vendor checks and establish documentation retention processes for both new vendor setups and reconciliations with the third-party vendor.

Finding Text

Finding 2022-001 Identification of the federal program: Federal Agency: Various Assistance Listing: Various; Research and Development Cluster Award Year: 2022 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)." The Uniform Guidance 2 CFR Section 200.213 states, "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities". Condition: We noted the following matters during our testing of suspension and debarment control processes: (a) A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third party were accurate. (b) To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor's status has not changed. Sanford does not retain the supporting documentation that the vendor setup check resulted in no match in the suspension and debarment database indicating the vendor is not suspended or debarred. (c) Sanford did not retain the supporting documentation of the reconciliation of the vendor list that is received from the third-party vendor that is used to perform the suspension and debarment checks after the suspension and debarment checks are performed to ensure the listing is complete and agrees to the vendor list provided by Sanford to the third-party vendor. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match Sanford did not have policies and procedures in place to require that documentation is retained of its suspension and debarment checks performed when a new vendor is set up in the system if the vendor check resulted in no match with the suspension and debarment database indicating the vendor is not suspended or debarred. In addition, Sanford did not have policies and procedures in place to require that documentation is retained to support the reconciliations performed for ongoing monitoring purposes between the vendor list sent to the third-party vendor and the results provided by the third-party vendor. Effect or potential effect: Sanford's screening for suspension and debarment through the third-party vendor results may not be accurate. By failing to retain the documentation of the reconciliation of vendor files to the third-party vendor search results, sufficient evidence was not retained to prove that the reconciliation took place. As a result, there was not sufficient evidence to validate the appropriate internal controls took place to prevent Sanford from transacting with a vendor that was suspended or debarred, which was ultimately charged to a federal program. Questioned costs: $0 Context: The federal portion of expenditures subject to suspension and debarment was approximately $1,300,000, which represents approximately 10% of the Research and Development Cluster federal expenditures, of which no vendors were determined to be suspended or debarred. The total amount reported on the SEFA for R&D cluster is $13,361,367. Identification as a repeat finding, if applicable: Not applicable Recommendation: Management should add controls to validate the accuracy of the suspension and debarment search results performed by the third-party vendor when the search results in no match. Management should implement documentation retention processes to provide evidence over the suspension and debarment search for "new" vendors. In addition, management should implement documentation retention processes over the reconciliation between the vendor list sent to the third-party vendor to document completeness of the suspension and debarment check. Views of responsible officials: As it relates to the reliance on the third-party vendor that conducts suspension and debarment -party vendor searches, the third party vendor provides Sanford a SOC (System and Organizational Controls) 2 Type II report annually over the effectiveness of its controls. This is reviewed by Sanford?s compliance department to ensure that there are no findings that would be of concern to Sanford?s reliance on the vendor transaction. Considering the third-party vendor is not relied upon for financial controls, the third-party vendor does not have a SOC 1 (System and Organization Controls) Report and therefore did not provide this level of report to Sanford. To provide context on scale of vendors subject to suspension and debarment, Sanford paid a total of 27,000 vendors in 2022. There were three vendors identified through the vendor setup and monitoring process to be suspended or debarred. None of those vendors were associated with the programs funded with federal funds. Sanford?s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or disbarred. Sanford believes the risk of any material disbursement to suspended and debarred vendors is effectively mitigated through existing preventive and detective internal controls. Sanford will document a periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. In addition, Sanford will enhance its procedural documentation regarding retention of evidence related to reconciliation of vendor list when discrepancies are identified and the suspension and debarment results that is generated through the vendor setup process.

Categories

Procurement, Suspension & Debarment Subrecipient Monitoring

Other Findings in this Audit

  • 39508 2022-001
    Significant Deficiency
  • 39509 2022-001
    Significant Deficiency
  • 39510 2022-001
    Significant Deficiency
  • 39511 2022-001
    Significant Deficiency
  • 39512 2022-001
    Significant Deficiency
  • 39513 2022-001
    Significant Deficiency
  • 39514 2022-001
    Significant Deficiency
  • 39515 2022-001
    Significant Deficiency
  • 39516 2022-001
    Significant Deficiency
  • 39517 2022-001
    Significant Deficiency
  • 39518 2022-001
    Significant Deficiency
  • 39519 2022-001
    Significant Deficiency
  • 39520 2022-001
    Significant Deficiency
  • 39521 2022-001
    Significant Deficiency
  • 39522 2022-001
    Significant Deficiency
  • 39523 2022-001
    Significant Deficiency
  • 39524 2022-001
    Significant Deficiency
  • 39525 2022-001
    Significant Deficiency
  • 39526 2022-001
    Significant Deficiency
  • 39527 2022-001
    Significant Deficiency
  • 39528 2022-001
    Significant Deficiency
  • 39529 2022-001
    Significant Deficiency
  • 39530 2022-001
    Significant Deficiency
  • 39531 2022-002
    Significant Deficiency
  • 39532 2022-002
    Significant Deficiency
  • 39533 2022-002
    Significant Deficiency
  • 39534 2022-001
    Significant Deficiency
  • 39535 2022-001
    Significant Deficiency
  • 39536 2022-001
    Significant Deficiency
  • 39537 2022-001
    Significant Deficiency
  • 39538 2022-001
    Significant Deficiency
  • 39539 2022-001
    Significant Deficiency
  • 39540 2022-001
    Significant Deficiency
  • 39541 2022-001
    Significant Deficiency
  • 39542 2022-001
    Significant Deficiency
  • 39543 2022-001
    Significant Deficiency
  • 39544 2022-001
    Significant Deficiency
  • 39545 2022-001
    Significant Deficiency
  • 39546 2022-001
    Significant Deficiency
  • 39547 2022-001
    Significant Deficiency
  • 39548 2022-001
    Significant Deficiency
  • 39549 2022-001
    Significant Deficiency
  • 39550 2022-001
    Significant Deficiency
  • 39551 2022-001
    Significant Deficiency
  • 39552 2022-001
    Significant Deficiency
  • 39553 2022-001
    Significant Deficiency
  • 39554 2022-001
    Significant Deficiency
  • 39555 2022-001
    Significant Deficiency
  • 39556 2022-001
    Significant Deficiency
  • 39557 2022-001
    Significant Deficiency
  • 39558 2022-001
    Significant Deficiency
  • 39559 2022-001
    Significant Deficiency
  • 39560 2022-001
    Significant Deficiency
  • 39562 2022-001
    Significant Deficiency
  • 39563 2022-001
    Significant Deficiency
  • 39564 2022-001
    Significant Deficiency
  • 39565 2022-001
    Significant Deficiency
  • 39566 2022-001
    Significant Deficiency
  • 39567 2022-001
    Significant Deficiency
  • 39568 2022-001
    Significant Deficiency
  • 39569 2022-001
    Significant Deficiency
  • 39570 2022-001
    Significant Deficiency
  • 39571 2022-001
    Significant Deficiency
  • 39572 2022-001
    Significant Deficiency
  • 39573 2022-001
    Significant Deficiency
  • 39574 2022-001
    Significant Deficiency
  • 39575 2022-001
    Significant Deficiency
  • 39576 2022-001
    Significant Deficiency
  • 39577 2022-001
    Significant Deficiency
  • 39578 2022-001
    Significant Deficiency
  • 39579 2022-001
    Significant Deficiency
  • 39580 2022-001
    Significant Deficiency
  • 615950 2022-001
    Significant Deficiency
  • 615951 2022-001
    Significant Deficiency
  • 615952 2022-001
    Significant Deficiency
  • 615953 2022-001
    Significant Deficiency
  • 615954 2022-001
    Significant Deficiency
  • 615955 2022-001
    Significant Deficiency
  • 615956 2022-001
    Significant Deficiency
  • 615957 2022-001
    Significant Deficiency
  • 615958 2022-001
    Significant Deficiency
  • 615959 2022-001
    Significant Deficiency
  • 615960 2022-001
    Significant Deficiency
  • 615961 2022-001
    Significant Deficiency
  • 615962 2022-001
    Significant Deficiency
  • 615963 2022-001
    Significant Deficiency
  • 615964 2022-001
    Significant Deficiency
  • 615965 2022-001
    Significant Deficiency
  • 615966 2022-001
    Significant Deficiency
  • 615967 2022-001
    Significant Deficiency
  • 615968 2022-001
    Significant Deficiency
  • 615969 2022-001
    Significant Deficiency
  • 615970 2022-001
    Significant Deficiency
  • 615971 2022-001
    Significant Deficiency
  • 615972 2022-001
    Significant Deficiency
  • 615973 2022-002
    Significant Deficiency
  • 615974 2022-002
    Significant Deficiency
  • 615975 2022-002
    Significant Deficiency
  • 615976 2022-001
    Significant Deficiency
  • 615977 2022-001
    Significant Deficiency
  • 615978 2022-001
    Significant Deficiency
  • 615979 2022-001
    Significant Deficiency
  • 615980 2022-001
    Significant Deficiency
  • 615981 2022-001
    Significant Deficiency
  • 615982 2022-001
    Significant Deficiency
  • 615983 2022-001
    Significant Deficiency
  • 615984 2022-001
    Significant Deficiency
  • 615985 2022-001
    Significant Deficiency
  • 615986 2022-001
    Significant Deficiency
  • 615987 2022-001
    Significant Deficiency
  • 615988 2022-001
    Significant Deficiency
  • 615989 2022-001
    Significant Deficiency
  • 615990 2022-001
    Significant Deficiency
  • 615991 2022-001
    Significant Deficiency
  • 615992 2022-001
    Significant Deficiency
  • 615993 2022-001
    Significant Deficiency
  • 615994 2022-001
    Significant Deficiency
  • 615995 2022-001
    Significant Deficiency
  • 615996 2022-001
    Significant Deficiency
  • 615997 2022-001
    Significant Deficiency
  • 615998 2022-001
    Significant Deficiency
  • 615999 2022-001
    Significant Deficiency
  • 616000 2022-001
    Significant Deficiency
  • 616001 2022-001
    Significant Deficiency
  • 616002 2022-001
    Significant Deficiency
  • 616003 2022-001
    Significant Deficiency
  • 616004 2022-001
    Significant Deficiency
  • 616005 2022-001
    Significant Deficiency
  • 616006 2022-001
    Significant Deficiency
  • 616007 2022-001
    Significant Deficiency
  • 616008 2022-001
    Significant Deficiency
  • 616009 2022-001
    Significant Deficiency
  • 616010 2022-001
    Significant Deficiency
  • 616011 2022-001
    Significant Deficiency
  • 616012 2022-001
    Significant Deficiency
  • 616013 2022-001
    Significant Deficiency
  • 616014 2022-001
    Significant Deficiency
  • 616015 2022-001
    Significant Deficiency
  • 616016 2022-001
    Significant Deficiency
  • 616017 2022-001
    Significant Deficiency
  • 616018 2022-001
    Significant Deficiency
  • 616019 2022-001
    Significant Deficiency
  • 616020 2022-001
    Significant Deficiency
  • 616021 2022-001
    Significant Deficiency
  • 616022 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.498 Provider Relief Fund $6.53M
93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services $2.96M
93.697 Covid-19 Testing for Rural Health Clinics $2.30M
93.859 Biomedical Research and Research Training $2.02M
93.461 Covid-19 Testing for the Uninsured $1.25M
93.817 Hospital Preparedness Program (hpp) Ebola Preparedness and Response Activities $1.19M
93.399 Cancer Control $983,416
93.110 Maternal and Child Health Federal Consolidated Programs $655,978
93.838 Lung Diseases Research $653,335
93.RD National Cancer Institute $489,656
14.871 Section 8 Housing Choice Vouchers $464,849
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $442,880
93.376 Title: Multiple Approaches to Support Young Breast Cancer Survivors and Metastatic Breast Cancer Patients (b) $412,442
93.837 Cardiovascular Diseases Research $411,820
93.734 Empowering Older Adults and Adults with Disabilities Through Chronic Disease Self-Management Education Programs ? Financed by Prevention and Public Health Funds (pphf) $359,558
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $336,467
93.172 Human Genome Research $334,494
93.211 Telehealth Programs $272,944
94.016 Senior Companion Program $247,557
12.420 Military Medical Research and Development $241,969
93.217 Family Planning_services $241,122
93.788 Opioid Str $223,310
93.121 Oral Diseases and Disorders Research $221,529
93.665 Emergency Grants to Address Mental and Substance Use Disorders During Covid-19 $209,758
21.027 Coronavirus State and Local Fiscal Recovery Funds $205,173
32.006 Covid-19 Telehealth Program $195,298
93.669 Child Abuse and Neglect State Grants $164,301
14.231 Emergency Solutions Grant Program $159,569
93.155 Rural Health Research Centers $156,202
14.157 Supportive Housing for the Elderly $133,396
93.396 Cancer Biology Research $127,294
93.426 Improving the Health of Americans Through Prevention and Management of Diabetes and Heart Disease and Stroke $118,161
47.074 Biological Sciences $96,208
93.865 Child Health and Human Development Extramural Research $88,761
93.242 Mental Health Research Grants $75,672
16.320 Services for Trafficking Victims $63,102
10.557 Special Supplemental Nutrition Program for Women, Infants, and Children $56,614
93.426 Consolidated Health Centers (community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) $52,503
93.959 Block Grants for Prevention and Treatment of Substance Abuse $48,053
93.994 Maternal and Child Health Services Block Grant to the States $41,960
93.761 Evidence-Based Falls Prevention Programs Financed Solely by Prevention and Public Health Funds (pphf) $40,789
93.969 Pphf Geriatric Education Centers $39,617
93.391 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $38,678
93.866 Aging Research $37,823
93.575 Child Care and Development Block Grant $29,120
16.575 Crime Victim Assistance $28,067
16.812 Second Chance Act Reentry Initiative $27,086
93.380 The Cdc Public Health Cancer Genomics Program: Translating Research Into Public Health Practice (b) $24,486
93.800 Organized Approaches to Increase Colorectal Cancer Screening $24,317
93.136 Injury Prevention and Control Research and State and Community Based Programs $23,265
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $22,727
10.558 Child and Adult Care Food Program $18,838
20.509 Formula Grants for Rural Areas and Tribal Transit Program $18,527
45.025 Promotion of the Arts_partnership Agreements $17,546
93.867 Vision Research $16,939
93.241 State Rural Hospital Flexibility Program $15,669
20.513 Enhanced Mobility of Seniors and Individuals with Disabilities $15,221
93.350 National Center for Advancing Translational Sciences $14,195
93.268 Immunization Cooperative Agreements $13,725
93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders $13,297
93.393 Cancer Cause and Prevention Research $12,477
93.092 Affordable Care Act (aca) Personal Responsibility Education Program $11,374
93.847 Diabetes, Digestive, and Kidney Diseases Extramural Research $11,354
93.301 Small Rural Hospital Improvement Grant Program $11,206
20.616 National Priority Safety Programs $11,003
84.063 Federal Pell Grant Program $8,659
16.758 Improving the Investigation and Prosecution of Child Abuse and the Regional and Local Children's Advocacy Centers $8,240
93.365 Sickle Cell Treatment Demonstration Program $7,902
93.397 Cancer Centers Support Grants $7,185
93.889 National Bioterrorism Hospital Preparedness Program $5,950
93.982 Mental Health Disaster Assistance and Emergency Mental Health $5,800
93.855 Allergy, Immunology and Transplantation Research $5,277
97.012 Boating Safety Financial Assistance $3,999
93.080 Blood Disorder Program: Prevention, Surveillance, and Research $3,524
93.898 Cancer Prevention and Control Programs for State, Territorial and Tribal Organizations $2,838
93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (sed) $2,811
93.550 Transitional Living for Homeless Youth $2,750
84.287 Twenty-First Century Community Learning Centers $2,202
93.RD Niaid Hiv and Other Infectious Diseases Clinical Research Support Services (crss) $1,596
93.069 Public Health Emergency Preparedness $1,368
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $1,308
84.181 Special Education-Grants for Infants and Families $1,153
93.590 Community-Based Child Abuse Prevention Grants $473
16.589 Rural Domestic Violence, Dating Violence, Sexual Assault, and Stalking Assistance Program $356