Finding Text
Assistance Listing Number, Federal Agency, and Program Name: Assistance
Listing Number 59.077, U.S. Small Business Administration
Federal Award Identification Number and Year: SBAHQ22CNP0003, Grant
Period 12/01/2021-11/30/2023
Pass-through Entity - N/A
Finding Type - Significant deficiency in internal control over suspension and
debarment compliance
Repeat Finding - No
Criteria - Section 14 of the U.S. Small Business Administration grant agreement
noted that the Hub cannot use project funds to pay salaries of employees or costs
of consultants, contractors or other service providers where such entities are
currently suspended or debarred. The Hub is responsible for verifying those entities
paid or (where applicable) assisted with project funds or project resources are not
suspended. To determine if an individual or firm is suspended or debarred, the Hub
may consult the System for Award management (https://www.sam.gov/).
Additionally, Section 14 of the grant agreement refer for further guidance regarding
suspension and debarment to 2 CFR Part 180 and 2700. According to 2 CFR Part
180.300 covered transaction entered with a vendor/contractor at the next lower tier,
USHCC must verify the vendor/contractor with whom USHCC intend to do business
is not excluded or disqualified. USHCC do this by a) checking SAM exclusions, b)
collecting a certification from that vendor/contractor, c) adding a clause or condition
to the covered transaction with that vendor/contractor. Condition - During testing of suspension and debarment requirement for activities
allowed/unallowed, allowed costs/cost principles and procurement compliances, it
was noted that USHCC did not provide proof of evidence that verification for
suspension and debarment was performed and maintained through the System of
Award Management. USHCC provided an internal company generated memo which
states that the federal requirements have been followed. However, the internal
document does not rise to a sufficient and appropriate audit evident to demonstrate
that USHCC consulted with System of Award Management as required by U.S.
Small Business Administration.
Identification of How Likely Questioned Costs Were Computed - N/A
Know Questioned Costs - None - Upon review of the excluded parties listing as
part of the audit process, it was determined that none of the parties that were
awarded procurements were excluded parties.
Context - USHCC hired contractors or vendors to provide goods or services with
federal funding but did not have audit evidence that USHCC consulted with System
of Award Management as required by U.S. Small Business Administration for any of
the contractors or vendors.
Effect - The effect of the finding is that failure to monitor suspension and debarment
could cause funds to be disbursed to vendors or contractors who are not eligible to
have goods purchased and services with federal monies.
Cause - Management did not have sufficient documentation in place to ensure there
is proper audit trail for the suspension and debarment compliance.
Recommendation - We recommend internal control procedures should be
strengthened and enforced to ensure that the appropriate suspension and
debarment verifications are performed and maintained for all vendors or contractors
providing goods and services.View of Responsible Officials and Corrective Action Plan – Management
selected and presented contractors with proposals that were included in the original
CNPP grant application and were approved by SBA prior to any disbursement of
funds. Management also contemporaneously signed a memo attesting that each and
every contractor hired for the CNPP program was verified to be eligible to provide
services with to be procured with federal funds. This verification was done in
SAM.gov searching for exclusions but the related documentation (i.e. screenshots)
was not saved. However, Management has already updated its internal controls
beginning of 2023 and now maintains each screenshot of suspension debarment
verification performed in SAM.gov.