Finding 528243 (2024-001)

Finding 2024-001 – Procurements and Suspension and Debarment Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of the Treasury Passed Through: N/A – Direct Program Award Year: Fiscal Year 2023-2024 Compliance Requirement: Procurement and Suspension and Debarment Questioned Costs: $0 Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.303 states that the non- Federal entity (County) 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. Per § 200.332, recipients and subrecipients are subject to the procurement and debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition During our testing of procurement and suspension and debarment, we noted six (6) instances where the County did not keep record for verifying that an entity with which it planned to enter into a covered transaction was not debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Cause of Condition The County’s existing internal control system is not operating effectively to provide reasonable assurance that procurement procedures in place comply with the procurement requirements related to the program. Repeat Finding No. Effect of Condition There is increased risk of noncompliance with the procurement requirement as set forth in the U.S. Office of Management and Budget (OMB) Compliance Supplement, which can jeopardize future federal funding as well as result in the payback of federal awards. Failure to conduct proper verifications before engaging in a covered transaction with an entity could result in fraud, waste, and abuse of federal funds.Recommendation We recommend the County design and implement internal control activities over the procurement and suspension and debarment compliance requirement under the Uniform Guidance. We also recommend the County keeps adequate records for verifying the contractors receiving federal grant funding were not debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Management Response and Corrective Action Plan The County has confirmed that the internal procurement process incorporates the verification that contractors are in possession of valid, applicable licenses and are not barred, suspended or otherwise excluded from receiving federal funds prior to engaging in contracted work. Reference to this process has not been regularly documented; going forward, verifications will be documented on the contract review cover sheet to further support the completion of the process. Copies of supporting documentation will be attached, when applicable, to demonstrate eligibility.