FAC Explorer

Finding 398158 (2023-001)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2023
Accepted
2024-05-21
Audit: 306859
Organization: Strada Collaborative LLC (IN)
Auditor: Ey LLP

AI Summary

  • Core Issue: Strada Collaborative, LLC lacks effective internal controls for managing federal awards, specifically regarding vendor contracts and suspension/debarment checks.
  • Impacted Requirements: Failure to comply with Section 200.303 of the Uniform Guidance, which mandates proper internal controls to ensure compliance with federal regulations.
  • Recommended Follow-Up: Implement a system to verify that all vendors have signed contracts with necessary suspension and debarment addendums before processing payments.

Finding Text

nformation on Federal Program: Federal Grantor: United States Department of Education Assistance Listing No.: 84.116  Major Program:  Fund for the Improvement of Postsecondary EducationAward Period: January 1, 2021- December 31, 2023 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 states 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).” Condition: Strada Collaborative, LLC did not have suitably designed internal controls in place over the major program; Fund for the Improvement of Postsecondary Education, related to procurement, suspension and debarment.Cause: Strada Collaborative, LLC did not effectively design internal controls to require validation that all vendors appropriately have a signed contract with a specific addendum related to suspension and debarment prior to payment.Effect or potential effect: Strada Collaborative, LLC enters into a contract with a vendor that has been suspended or debarred resulting in the Company being unable to receive any new awards from the Federal Government or conduct business with the Federal Government.Questioned costs: None Context: We selected a sample of 6 subcontractors (vendors) to test the compliance requirements for procurement, suspension and debarment for the year ended December 31, 2023. We noted one vendor that the Company did not obtain confirmation of suspension and debarment. As this was the only exception, the maximum exposure is $29k.

Corrective Action Plan

Finding 2023-001 A significant deficiency was issued related to procurement and suspension and debarment for the Fund for the Improvement of Postsecondary Education training grant agreement. We designed and placed into operation a control to ensure that covered transactions are not made with a debarred or suspended party. Strada Collaborative LLC (Collaborative), where applicable, has a standard addendum included within each vendor agreement in which the counterparty attests to suspension/debarment and such agreement is executed with a vendor before any invoice from that vendor is paid.  However, there was one occurrence for which a covered transaction was entered into without the execution of a formal agreement and addendum to obtain the counterparty’s attestation regarding suspension/debarment.  To ensure that covered transactions are not made with a debarred or suspended party, we are in the process of implementing control procedures to ensure that invoices payable to a subrecipient or contractor related to federal awards are supported by an executed agreement with the counterparty’s attestation regarding suspension/debarment.For such invoices submitted by Collaborative to the Accounts Payable Department (Strada AP) for payment, a copy of the agreement, including the addendum, that the invoice pertains to must be included in order to be routed for payment. Upon receipt by Strada AP of any such invoices submitted by Collaborative for payment, Strada AP will review to ensure that a copy of the relevant agreement is included with the submission.  If such invoice is submitted with a project code or customer code associated with a federal award, Strada AP will verify that the included agreement has an addendum with the partner's signed attestation.  If there is not an agreement included in the submission, or if there is not a signed addendum, Strada AP will reject routing  the invoice for payment and notify Collaborative.  In addition, Collaborative will immediately review the complete population of contractors/subrecipients with 2024 activity on open federal awards to ensure that for all active existing partners Collaborative has obtained an executed agreement with a signed addendum capturing the counterparty's attestation regarding suspension/debarment.  Any omissions will be followed up on by the federal award designated project director to obtain the partner's attestation regarding suspension/debarment or to otherwise independently verify that the partner is not debarred or suspended. John Morrical, Senior Auditor, is responsible for this Corrective Action Plan.The control will commence as of June 1, 2024.

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 974600 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.116 Fund for the Improvement of Postsecondary Education $1.43M
10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program $403,612
17.280 Workforce Investment Act (wia) Dislocated Worker National Reserve Demonstration Grants $226,281
17.268 H-1b Job Training Grants $35,435