Finding Text
Finding 2023-002: Suspension and Debarment and U.S. Government Regulations on Terrorism
Information on the Federal Programs: All Programs
Criteria or Specific Requirement: CFR 200.213 "Reporting a determination that a non-Federal entity is not qualified for a Federal award" states that 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. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c) adding a clause or condition to the covered transaction with that person.
Condition: During our testing over Suspension and Debarment, we determined that the Organizations did not maintain documentation of screenings on potential or current vendors, suppliers or contractors that were paid with Federal funds.
Cause: The Organizations do not have a formal internal policy with respect to screening vendors, suppliers, contractors and employees in order to adhere to compliance over suspension and debarment.
Effect or Potential Effect: The Organizations could make payments to an entity or individual that has been debarred or suspended by the US Government; such costs would be disallowed, and the Organizations could face consequences for lack of compliance.
Questioned Costs: N/A
Context: Our audit procedures consisted of testwork completed on subawards and individual expenditures charged to the Federal awards. The report in which samples were selected was generated directly from the Organizations' general ledger (accounting system). We consider our sample to be representative of the population.
Identification as a Repeat Finding: N/A
Recommendation: We recommend that management develop and implement a formal policy on suspension and debarment. This policy should include a threshold for when vendors, suppliers, contractors and employees should be screened. All screenings should be conducted prior to signing a contract or issuing payment. We recommend that the Organizations notify all employees of this policy and ensure that it is enforced during the upcoming fiscal year.