GREATER WENATCHEE REGIONAL EVENTS CENTER PUBLIC FACILITIES DISTRICT

The District did not have controls in place to ensure compliance with federal suspension and debarment requirements. CFDA Number and Title: 59.075 ? COVID-19 Shuttered Venue Operators Grant Program Federal Grantor Name: U.S. Small Business Administration Federal Award/Contract Number: SBAHQ21SV011175.2 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition The purpose of the Shuttered Venue Operators Grant is to provide funding to support the ongoing operation of eligible live venue operators or performers, theatrical producers, live performing art organization operations, nonprofit museum operators, motion picture theater operators, and other representatives that have experienced significant revenue losses because of the COVID-19 pandemic. Federal regulations require recipients to establish and maintain 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 District 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 the contractor has not been suspended or debarred or otherwise excluded. The District may accomplish this verification by collecting 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 the System for Award Management (SAM.gov) for exclusion records. The District must perform this verification before awarding the contract or paying the contractor more than $25,000, and it must keep documentation demonstrating compliance with this federal requirement. Our audit found that the District did not have controls and did not verify that three contractors paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition This was a new federal program and the first year the District received federal funds. District employees responsible for monitoring the program did not have a clear understanding of federal suspension and debarment requirements. Further, the District did not initially intend to pay these contractors with federal funds. Therefore, employees did not verify these contractors were not suspended and debarred once the District determined it would be using program funds to pay them. Effect of Condition The City did not obtain a written certification, insert a clause into the contract or check exclusion records to verify all three of its contractors were not suspended or debarred before contracting or purchasing. The District paid these three contractors a total of $155,112 in 2021 Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that have been suspended or debarred unallowable, and the federal grantor could potentially recover them. During the audit, we verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District develop procedures to ensure staff understand federal suspension and debarment requirements and to verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred. In addition, the District should check contractors? suspension and debarment status when the District determines that federal funding sources will be used. District?s Response The Shuttered Venues Operating Grant administered by the SBA (part of the American Recovery Act) is the first and only federal grant applied for or received by the Greater Wenatchee Regional Events Center PFD. The grant application was submitted in response to the COVID pandemic and the closure of the Town Toyota Center owned and managed by the PFD. It is our understanding the State Auditor?s Office has confirmed that the companies we should have requested Certification of Suspension and Disbarment from are in proper compliance. Seeking federal grants is not part of our normal course of business and was a unique situation in light of the COVID pandemic. The PFD does not anticipate seeking additional federal grants but should a federal grant application occur in the future, key PFD staff have been advised to verify that contractors paid $25,000 or more, all or in part with federal funds are not suspended or disbarred and to check contractor?s suspension and disbarment status when federal funding sources are used. Auditor?s Remarks We thank district officials for their attention on this matter. We will follow up during the next 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 Department and Suspension (Nonprocurement) establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.