Finding Text
Finding 2023-003: Federal Procurement Requirements for Suspension and Debarment
Information on the Federal Program: CFDA 14.135—U.S. Department of Housing and Urban Development, Section 221(d)(4) Mortgage Insurance Rental Housing for the Elderly, grant number 113-35459.
Criteria: Uniform Guidance §200.213, Suspension and Debarment, 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. To ensure compliance with HUD regulations, the Village should have internal controls in place to ensure no contracts are entered into with vendors who are debarred or suspended from participation in federal programs.
Condition: Procurement procedures applied for the year ended December 31, 2023 included a control to verify vendors were not debarred or suspended from participation in federal programs. This was identified in a test of a sample of contracts procured in 2023 and during our walkthrough of internal controls. None of the vendors selected in the testing were debarred or suspended, but no step was documented by the Village to ensure this was the case.
Cause: The internal control process for the Village did not require the retention of proper documentation for this specific requirement in the federal procurement requirements.
Effect or Potential Effect: Entering into contracts with debarred or suspended vendors could lead to noncompliance with HUD regulations and could result in corrective action by HUD.
Questioned Costs: $0. The audit testing identified no vendors who were suspended or debarred.
Context / Sampling: The finding was identified in our test of a non-statistical sample of two vendors requiring suspension and debarment procedures.
Repeat Finding from Prior Year(s): Yes
Recommendation: The board of directors and management of the Village should ensure the Village’s policies for procurement activities are consistent with current federal requirements, and a review of internal controls should be performed to ensure all such requirements are addressed by procurement procedures being performed.
Responsible Official’s Response: Management will modify its internal control practices to ensure procurement activities are consistent with the current federal requirements and specifically with the regard to ensuring contractual parties are not disbarred. This is to ensure compliance with HUD entering into contracts with vendors who are disbarred or suspended from participation in federal programs. Maintain documentation in each vendor file to verify selected vendors are not disbarred or suspended.
Planned Implementation Date of Corrective Action: Management will implement this change immediately.
Person Responsible for Corrective Action: Executive Director.