Finding 554200 (2024-003)

2024-003 Suspension and Debarment Federal Agency: U.S. Department of Agriculture Federal Program Name: Water and Waste Disposal Systems for Rural Communities Assistance Listing Number: 10.760 Federal Award Identification Number and Year: Pass Through Agency: N/A Pass Through Numbers: N/A Award Period: May 13, 2024 – May 13, 2027 Type of Finding: Material Weakness in Internal Control Over Compliance and Other Matter Criteria or Specific Requirements 2 CFR 200 states that nonfederal 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. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition District does not have a formal policy regarding suspension and debarment. The District did not document verification that a vendor was not suspended or debarred prior to entering into a covered transaction. Upon communication with the audit firm, the District did subsequently verify that the one vendor tested was in fact not a suspended or debarred vendor. Questioned Costs None Context While performing compliance procedures, it was noted that the District had one vendor that required documentation of suspension and debarment. The District did not verify suspension and debarment status of this one vendor prior to entering into the covered transaction. Cause District does not have a formal policy regarding suspension and debarment. Effect The District is not in compliance with suspension and debarment requirements. Vendors may be paid with federal funds that are suspended and debarred entities which would not be in compliance with uniform guidance. Section III – Findings and Questioned Costs – Federal Programs (Continued) 2024-003 (Continued) Suspension and Debarment (Continued) Recommendation We recommend that the District review the policies required by the Uniform Guidance and consider adopting appropriate policies related to procurement and suspension and debarment to ensure compliance. View of Responsible Officials There is no disagreement with the finding.