Finding Text
Finding 2022-002 Internal Control Over Procurement and Debarment Type of Finding: Material Weakness in Internal Control over Compliance Condition and Context: An effective internal control system was not in place at the Organization to ensure compliance with requirements related to reviewing the debarment and suspension status of subcontractors before issuing payments of federal funds. Criteria: Management is responsible for establishing internal controls to prevent subcontracting with any party which is debarred, suspended, otherwise excluded from, or ineligible for participation in Federal assistance programs by any Federal department or agency. Cause: The Organization had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the requirement to review federal debarment or suspended status for all subcontractors. Effect: The failure to establish an internal control system could enable noncompliance to go undetected. Noncompliance with the grant agreement leading to payments made to debarred entities could have resulted in the loss of federal funds to the Organization. Questioned Costs: There were no questioned costs identified. Recommendation: We recommended that the Organization's management establish and implement a system of internal controls and maintain adequate supporting documentation to ensure all subcontractors are reviewed for federal debarment and suspension status before receiving federal funds. Views of Responsible Officials: Management agrees with the recommendation and has implemented the following steps. The Organization has implemented a checklist of requirements for each federal contract that includes the review of all new vendors for suspension or debarment on Sam.gov.