Finding 521104 (2024-003)

Program: Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing No.: 21.027 Federal Agency: U.S. Department of Treasury Passed-through: California Department of Finance Award Number and Year: CSLFRF Compliance Requirement: Procurement Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance Criteria: Per 2 CFR part 200, subpart D, section 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award is compliance with federal statues, regulations, and the terms and conditions of the federal award. Prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300. Condition: We identified that the City’s purchasing and contracting policy does not require the verification of the debarment and suspension status of vendors prior to entering into agreements. We also noted that the City did not maintain documentation that they verified that the contractor was not suspended or debarred prior to entering into a covered transaction. Cause: The City’s policy does not require the verification of the debarment and suspension of a vendor prior to entering into a covered transaction, nor does it address on what type of documentation should be maintained to ensure they are not suspended and debarred. Effect: Noncompliance with these requirements could result in disbursements of Federal funds to suspended and debarred parties. Questioned Costs: None reported. Context/Sampling: We selected 2 out of 4 of the City’s procurement transactions associated with the program. Repeat Finding from Prior Year(s): No. Recommendation: We recommend that the City include policies and procedures within their procurement policy to check whether or not vendors are suspended and debarred and to maintain that documentation within the procurement file. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.