Finding Text
2023-005: Inadequate Internal Controls over Suspension and Debarment Compliance Requirement
U.S. Department of Health and Human Services
Federal Programs: Health Center Program Cluster (ALN numbers 93.224/93.527) (Federal Award Year 2023) and Advanced Nursing Education Workforce Grant Program (ALN number 93.247) (Federal Award Year 2023)
Repeat Finding: No
Criteria: 2 CFR 200.303(a) requires that each non-Federal 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." The Organization does not have effective suspension and debarment controls in place.
31 CFR 19.300 requires that "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."
Condition: When the Organization entered into covered transactions, it did not verify that the entity was not suspended or debarred or otherwise excluded. While the Organization does have an internal control policy in place regarding the Simplified Registration Services (SAM) exclusion verifications of suspended or debarred entities, the Organization did not always adhere to the policy when entering into covered transactions. Additionally, the policy is vague and does not include details about maintaining evidence of actions taken to ensure proper suspension and debarment requirements are met.
Cause: The Organization does not have procedures in place to ensure suspension and debarment checks are completed prior to entering into purchase or service agreements with vendors. Evidence of actions taken to ensure proper suspension and debarment requirements were not being maintained by the Organization.
Effect: Failing to have the appropriate controls in place may result in vendors who are suspended or debarred receiving federal funds.
Recommendation: We recommend that management implement controls to ensure suspension and debarment checks are completed and documented prior to entering into purchase or service agreements with vendors.
View of responsible officials of the auditee: Management agrees with the finding and recommendation.