Finding Text
Finding 2023-003: Suspension and Debarment
Information About the Program: All Programs
Criteria: As stated in 2 CFR §200.303, the non-Federal entity (i.e. NFHA) must establish and
maintain effective internal control over the Federal award that provides reasonable assurance that
the non-Federal entity is managing the Federal award in compliance with Federal statutes,
regulations and terms and conditions of the Federal award. These internal controls should be in
compliance with guidance in “Standards for Internal Control in the Federal Government” issued by
the Comptroller General of the United States or in the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
According to 2 CFR §200.214, the non-Federal entity is subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The
regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are
debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance
programs or activities.
Condition: During our audit, we noted NFHA did not perform checks via SAM.gov to ensure that
potential vendors, contractors, or consultants are suspended or debarred. The failure to screen such
parties increases the possibility that U.S. Government funds may inadvertently be provided to
individuals or organizations deemed to be excluded by the U.S. Government.
Cause: Management did not have effective internal controls in place to ensure that suspension and
debarment checks were being performed prior to entering into contracts with vendors or contractors/
consultants.Potential Effect: NFHA is exposed to an increased risk that future noncompliance could occur by
entering into transactions with vendors, contractors, or consultants that are suspended, debarred, or
otherwise excluded from contracting with the U.S. Federal Government. If a non-Federal entity
knowingly does business with an excluded person, the agency responsible for NFHA's funding may
disallow costs, annul or terminate the transaction, issue a stop work order, debar or suspend NFHA,
or take other remedies as appropriate.
Questioned Costs: None.
Context: NFHA failed to perform its due diligence with respect to these requirements. The issue is
considered systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend NFHA implement internal controls to ensure that all vendors,
contractors, and consultants are screened for suspension and debarment prior to entering into any
executed contract. We further recommend that a policy be formalized and implemented that requires
an annual screening, at a minimum, of any current vendors, contractors, or consultants as well.