Finding Text
2022-001 Federal Agency: U.S. Department of Treasury and U.S. Department of Agriculture Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) and Child Nutrition Cluster (CNC) Assistance Listing Number: 21.027 and 10,553, 555 559 Federal Award ID Number (FAIN) and Year: S425D2000005, 2021- 2024 (CLSFRF), and 2022 (CNC) Pass-Through Agency: Maryland State Department of Education Pass-Through Number(s): 21176201, 21189901, 21181601, 21187301, 21177401, 21188801, 21184001(CSLFRF) and CNC: none Award Period: March 3, 2021, through - December 31, 2024 (CSLFRF) and July 1, 2021, through June 30, 2022 (CNC) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply 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: During our testing, we noted the schools did not maintain documentation to support vendor?s suspension and debarment status. The school?s procurement procedures and annual procurement updates advise employees to verify the vendor?s suspension and debarment status, but evidence of the review is not maintained. CLA was not able to determine if the vendor was not suspended or debarred prior to contracting with the schools. We were able to confirm that the vendor was not identified as suspended or debarred via SAMs.gov during the audit. Questioned costs: None Context: During our testing, two of the five CNC vendors and four of the four CSLFRF vendors did not have documentation of their suspension or debarment status prior to the school?s contracting with the vendor. Cause: The client was aware of the requirement and ensured communication of the requirement was provided to the schools? employees but did not maintain documentation of the review. Effect: The schools did not have adequate monitoring controls to provide evidence of compliance with the requirement. Repeat Finding: No Recommendation: We recommend that the schools develop internal controls and procedures to ensure that documentation of vendor?s suspension and debarment status is maintained in accordance with the required retention policy. Views of responsible officials: There is no disagreement with the audit finding.