Finding Text
See Schedule of Findings and Questioned Costs for chart/table 2022-005: Suspension and Debarment (Significant Deficiency) Criteria: The Authority must design internal controls to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.214, non-Federal entities are prohibited from contracting with or making sub-awards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include contracts for goods and services awarded under a nonprocurement transaction that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. All nonprocurement transactions entered into by a pass-through entity (i.e., sub-awards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR Section 180.215. OMB Circular A-102 (2 CFR Part 180) requires that recipients ?shall comply with the nonprocurement debarment and suspension common rule implementing Executive Orders 12549 and 12689, Debarment and Suspension.? Condition/context: During the completion of the fiscal year 2021 audit, it was identified that the Authority did not have an internal control system in place to review suspension and debarment on funding decisions made for any purpose other than grant awards. In January 2022, the Authority rectified the deficiency and established a control system. However, proper controls were not in place for the first six months of the fiscal year under audit. For three out of seven vendors selected for testing with purchases greater than $25,000, we determined that the Authority had failed to review two of the vendors (non-grant recipients) for suspension and debarment. However, we independently verified the two vendors were not suspended or debarred. Cause: The Authority was not aware that suspension and debarment requirements applied to all covered transactions. Effect: If the Authority is not verifying that vendors with which it contracts are neither suspended nor debarred, it is possible that the Authority could contract with a vendor that is suspended or debarred, in which case the Authority may be required to return the funds expended to that vendor to the U.S. Department of Energy. Questioned costs: $0 Identification as a repeat finding: Yes; see prior-year finding 2021-003. Recommendation: As the Authority expanded its internal control policies and procedures related to suspension and debarment for grant awards to all covered transactions, we recommend continued compliance with the established policies and procedures. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.