Finding Text
(E) Significant Deficiency in Internal Control Over Compliance of Federal. Awards (F) Instance of noncompliance of Federal Awards Federal Agency: US Department of Health and Human Services
Program Name: Health Centers Cluster
Compliance Requirement: Procurement and Suspension and Debarment
Questioned Costs: None
Assistance Listing Number: 93.224, 93.527
Statement of Condition
MVCHS did not follow federal procurement and suspension and debarment regulation nor its federal procurement policy. During our test work, it was noted that 4 out of 4 tests of internal control over compliance, MVCHS did not screen vendors for compliance with suspension and debarment requirements.
Criteria
MVCHS is required to verify that entities it plans to do business with are not excluded or disqualified under the non-procurement common rule, or otherwise declared ineligible under statutory or regulatory authority.
According to §75.303 Internal controls of 45 CFR Part 75, the nonfederal entity must 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. According to §75.327 general procurement standards of 45 CFR Part 75, the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.
According to §200.303 Internal controls of 2 CFR Part 200, the nonfederal entity MVCHS must establish and maintain effective internal control over the Federal award that provides reasonable assurance MVCHS 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).
According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business With Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. This can been done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
Cause
Internal controls over compliance do not appear to have been adequately implemented due to lack of training, oversight, or resources.
Effect
The Institute may have entered into contracts with ineligible contractors and exposed itself to potential liability and loss of federal funds.
Recommendation
We recommend that the organization: View of Responsible Officials
MVCHS acknowledges the need to implement procedures to verify the suspension and debarment status of contractors prior to using federal funds. The Finance Department will develop a process to check for suspension and debarment prior to issuing a purchase order.
This process will be completed by May 6, 2024. Carla Melendez, Chief Financial Officer will be responsible for developing and implementing this process.
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follow its policies and procedures to verify the suspension and debarment status of contractors before awarding contracts using federal funds.
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include the required suspension and debarment clause in its contracts with contractors using federal funds.