Finding Text
Federal Agency: U.S. Department of Treasury
Federal Program Name: Coronavirus State and Local Fiscal Recover Funds
Assistance Listing Number: 21.027
Federal Award Identification Number and Year: Not Available
Pass-Through Agency: Maryland State Department of Education
Pass-Through Number: 211851
Award Period: 3.3.2921-12.31.2024
Type of Finding: Material Weakness in Control over Compliance, Material Noncompliance (Modified Opinion)
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.
2 CFR 180.300 states that an entity may determine suspension and debarment status by:
(a) Checking SAM (System for Award Management) Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
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 the 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 School Board did not have adequate internal controls designed to ensure vendors were not suspended or debarred.
Questioned Costs:
None noted.
Context:
The School Board could not provide documentation for one out of four vendors regarding ensuring the vendor was not suspended or debarred at the time of contract.
Cause:
The Board’s procedures and internal controls over suspension and debarment were not sufficient to ensure that all vendors’ suspension and debarment status was verified timely.
Effect:
Failure to verify the suspension and debarment status of vendors may result in the procurement of goods or services from vendors that are suspended or debarred and result in unallowable expenditures charged to the program.
Repeat Finding: No
Recommendation:
We recommend that the Board review its policies and procedures to ensure they include the three options for determining suspension and debarment status listed in 2 CFR 180.300 and that controls are sufficient to ensure that the suspension and debarment status is verified for all vendors prior to entering into covered transactions.
Views of responsible officials:
Management acknowledges the finding. Current procedures mandate suspension and debarment verification prior to entering into contracts or agreements with vendors. However, due to the timing of the policy implementation, there were vendor contracts executed and payments processed after the prior year's finding but before corrective action could be implemented.