SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Garfield County
January 1, 2022 through December 31, 2022
2022-002 The County did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of the Treasury
Federal Award/Contract Number: N/A
Pass-through Entity Name: N/A
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer, or broadband infrastructure. In 2022, the County spent $223,293 in program funds.
Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred, or otherwise excluded. The County may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The County must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement.
Our audit found the County’s controls were ineffective for ensuring that staff verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. Specifically, in 2022 the County paid two contractors more than $25,000 and did not have documentation demonstrating it verified they were not suspended or debarred before entering into contracts or purchasing.
We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance.
Cause of Condition
Although County staff were aware of the requirement, they could not locate the documents showing they verified contractors' suspension and debarment status.
Effect of Condition
Without adequate internal controls, the County increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the County made to an ineligible party would be unallowable, and the federal agency could potentially recover them. The County subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs.
Recommendation
We recommend the County improve its internal controls to ensure it verifies all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred, and maintain documentation demonstrating compliance with this requirement.
County’s Response
Due to turnover of key management and staff, Garfield County was unable to locate the debarment and suspension paperwork required for two purchases made with federal grant funds in 2022. Garfield County’s management and key staff who help in managing federal funding have become educated on the compliance requirements of federal suspension and debarment. Management and key staff have reviewed requirements listed on the State Auditor’s website and will continue to review federal funding requirements while administering federal grants.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.