Finding 524391 (2024-003)

Finding 2024-003: Lack of Control Documentation over Review of Suspended/Debarred Vendors Federal Agency: U.S. Department of Treasury Program Name: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: June 1, 2023 – May 31, 2024 Program Expenditures: $1,119,206 Questioned Costs: None Criteria: Uniform Grant Guidance (2 CFR 180.300) states that when entering into a covered transaction with another person at the next lower tier, the nonfederal entity must verify the person with whom the nonfederal entity intends to do business is not excluded or disqualified by: (a) checking Sam.gov Exclusions; or (b) collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure vendors are not suspended or debarred. Condition: KHSU was not able to provide support showing that a check had been performed on vendors with whom KHSU entered into covered transactions to verify the vendor were not suspended or debarred. Cause: KHSU officials stated while the organization had a policy in place requiring the review of vendors to ensure compliance with federal requirements, the policy did not include proper documentation requirements. Effect: If KHSU does not maintain documentation confirming a vendor under a covered transaction was not suspended or debarred, KHSU could enter into a transaction with a suspended or debarred vendor and as a result represent noncompliance and improper use of federal funds. Questioned Costs: None Context: KHSU had covered transactions with five vendors for the program totaling expenditures of $440,610. KHSU confirmed it performed the check but did not maintain documentation showing the check was performed. Our testing of all five vendors did not indicate that any were suspended or debarred. Repeat Finding: No. Recommendation: We recommend KHSU update its policy over suspended and debarred vendors to affirm documentation of review of SAM.gov is maintained or certification is obtained from the vendor ensuring they are not suspended or debarred. Views of Responsible Officials: Management agrees with the finding. Please see corrective action plan attached.