Finding Text
Finding 2023-001 – Significant Deficiency in Internal Control Over Compliance, Other Matters Federal Agency – U.S. Department of the Treasury
Assistance Listing Number/Federal Program – 21.027 COVID-19 Coronavirus Local Fiscal Recovery Funds
Compliance Requirement – Suspension and Debarment
Criteria – 2 CFR 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
2 CFR 180.300 prohibits entities from contracting with or making subawards under “covered transactions” to parties that are suspended or debarred from doing business with the federal government. A contract for goods or services is a covered transaction if awarded as a grant or payment for specified used and if the amount of the contract is expected to equal or exceed $25,000. In order to comply with federal suspension and debarment requirements, the City can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract.
Condition and Context – During our testing of one covered transaction, we noted that management was not able to provide supporting documentation that suspension and debarment procedures were performed before the start of the procurement contract.
Questioned Costs – None
Repeat Finding – No
Cause – Lack of sufficient tracking and monitoring procedures related to tracking of suspension and debarment for vendors.
Effect – Failure to obtain the required certifications or perform verification procedures with the SAM website before the procurement of good or services could result in the payment of federal funds to vendors that are suspended or debarred from participation in federal assistance programs, which could lead to questioned costs.
Recommendation – We recommend the agency either obtain certifications from vendors stating their organization is not suspended, debarred, or otherwise excluded from participation in federal assistance programs or document the procedures performed to verify the vendor is not identified as suspended or debarred on the SAM website. We recommend that the agency have proper procedures in place to ensure that all contractual documentation is maintained and able to be located.