Finding 573762 (2024-002)

Significant Deficiency

Requirement

Questioned Costs

Year

2024

Accepted

2025-08-18

Audit: 364417

Organization: City of Thornton, Colorado (CO)

Auditor: Rsm US LLP

AI Summary

Core Issue: The City lacks adequate controls to verify that vendors are not suspended or debarred before entering contracts.
Impacted Requirements: Compliance with federal regulations requiring pre-contract verification of vendor eligibility for federal funds.
Recommended Follow-Up: Implement procedures to ensure suspension and debarment checks are completed prior to contracting with vendors.

Finding Text

Finding 2024-002: Suspension and Debarment Assistance Listing Program Title: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Program Number: 21.027 Federal Agency: U.S. Department of the Treasury Award Year: 2024 Criteria: The Federal Government requires that 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 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. In addition, per the Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The City does not have adequate controls in place to ensure that suspension and debarment compliance requirements are met. Cause: Although the City does have a process in place for verifying vendors paid with federal funds are not suspended or debarred from receiving federal funds, this verification took place after a contract was entered into with the vendor instead of before. Effect or Potential Effect: In the absence of appropriate controls, the City could enter into a contract with a vendor or subrecipient that is suspended or debarred from participating in federal programs, which would result in noncompliance with federal program requirements. Questioned Costs: None. Context: Out of a sample of four vendors where suspension and debarment checks were completed by the City, this verification was not completed prior to the City entering into contracts with those vendors. Identification as a Repeat Finding, If Applicable: Not Applicable Recommendation: We recommend the City implement procedures to properly ensure that suspension and debarment verification occurs prior entering into a covered transaction with a vendor that receives federal funds. View of Responsible Officials: Management agrees with this finding.

Corrective Action Plan

Federal Awards Finding 2024-002: Suspension and Debarment Finding: The City receives State and Local Fiscal Recovery Funds (SLFRF) from the U.S. Treasury as outlined in the American Rescue Plan Act (ARPA). In 2024, the City originally planned to utilize the ‘revenue replacement’ provision in ARPA and did not interpret the guidance at that time to require the check for suspension and debarment but rather thought that revenue replacement provision would require the City only to conduct “business as usual” regarding purchasing, acquisitions and contracts. However, after the first single audit was completed and new guidance was released by the treasury, it was determined that this requirement was needed and as all the contracts and purchases had been entered into or were at a stage where they could not be checked prior to award it was determined that prior to submitting any expenses to the treasury, each quarter that suspension and debarment checks would be done on any vendors/contracts with a purchase or contract greater than $25,000. Corrective Actions Taken or Planned: As there is no opportunity to correct this since all contracts are already in place for the ARPA SLFRF, we will continue to check for suspension and debarment each quarter before submitting the expenses to the Treasury and will not submit any expenses related to vendors or contractors that are suspended or debarred. We will implement a review by the controller to make sure that the suspension and debarment check is being done quarterly and will document such review. All other contracts and awards related to federal funds will continue to have the suspension and debarment check performed by the contracts and purchasing department before issuance of the contract or award. Anticipated Date of Implementation/Completion: July 31, 2025 Name of contact person responsible for correction action: Doug Farmen, Controller

Other Findings in this Audit

573761 2024-003

Significant Deficiency
573763 2024-002

Significant Deficiency
573764 2024-002

Significant Deficiency
573765 2024-002

Significant Deficiency
573766 2024-003

Significant Deficiency
1150203 2024-003

Significant Deficiency
1150204 2024-002

Significant Deficiency
1150205 2024-002

Significant Deficiency
1150206 2024-002

Significant Deficiency
1150207 2024-002

Significant Deficiency
1150208 2024-003

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
20.939	Safe Streets and Roads for All	$362,689
21.027	Coronavirus State and Local Fiscal Recovery Funds	$357,389
97.044	Assistance to Firefighters Grant	$216,120
16.575	Crime Victim Assistance	$177,836
81.128	Energy Efficiency and Conservation Block Grant Program (eecbg)	$174,930
16.710	Public Safety Partnership and Community Policing Grants	$105,555
20.205	Highway Planning and Construction	$50,626
16.738	Edward Byrne Memorial Justice Assistance Grant Program	$33,403
20.616	National Priority Safety Programs	$26,121
14.218	Community Development Block Grants/entitlement Grants	$25,588
16.753	Congressionally Recommended Awards	$23,257
16.922	Equitable Sharing Program	$18,720
20.600	State and Community Highway Safety	$14,535
66.034	Surveys, Studies, Research, Investigations, Demonstrations, and Special Purpose Activities Relating to the Clean Air Act	$1,000
97.067	Homeland Security Grant Program	$956
97.036	Disaster Grants - Public Assistance (presidentially Declared Disasters)	$-11,980
15.507	Watersmart (sustain and Manage Americas Resources for Tomorrow)	$-22,303