Finding Text
2022-006 Procurement and Suspension and Debarment
Prior Year Finding Number: 2021-006
Repeat Finding Since: 2020
Type of Finding: Internal Control Over Compliance and Compliance
Severity of Deficiency: Significant Deficiency and Other Matter
Federal Agency: U.S. Department of Transportation and U.S. Department of the Treasury
Program: 20.205 Highway Planning and Construction, 21.027 COVID-19 — Coronavirus State and Local Fiscal Recovery Funds
Award Number and Year:
Assistance Listing Number Award Number Year
20.205 1052136 2022
21.027 Federal Direct 2022
Pass-Through Agency:
Assistance Listing Number Pass-Through Agency
20.205 Minnesota Department of Transportation
21.027 Not applicable
Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In addition, Title 2 U.S. Code of Federal Regulations § 200.318 states that the non-federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform with applicable federal law and the standards identified in this regulation. Lastly, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Covered transactions include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in Title 2 U.S. Code of Federal Regulations § 180.220.
Condition: The County has written procurement policies; however, these policies do not include the required components in accordance with Title 2 U.S. Code of Federal Regulations § 200.318. In addition, in the sample of two covered transactions tested, the verification for suspension and debarment was not performed before entering into the covered transactions.
Questioned Costs: None.
Context: This issue was discovered during the audit of the major federal programs; however, it impacts federal programs county-wide. Written policies that reflect the specific components of federal regulations improve controls to help ensure compliance with federal award requirements. The vendors were determined in the audit to not be suspended or debarred for the two covered transactions sampled. The County has drafted updated procurement policies to include components of the federal procurement requirements; these are pending review and approval by the Board of County Commissioners.
The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits.
Effect: Written policies and procedures that are not updated to reflect the federal procurement requirements increase the risk of noncompliance with federal program requirements. Failure to verify vendors are not suspended or debarred may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services.
Cause: The County has not prioritized updating its Procurement Policy for changes arising from federal procurement requirements due to the County not entering into many procurement contracts in its federal programs outside of highway contracts. In addition, Coronavirus State and Local Fiscal Recovery Funds were spent prior to the County determining they would be funded with federal funds and subject to suspension and debarment requirements.
Recommendation: We recommend the County include the specific components of the federal procurement requirements in its written procurement policies and procedures. We also recommend the County establish policies and procedures to ensure it does not enter into covered transactions with parties that are suspended or debarred.
View of Responsible Official: Acknowledge