City of Marshall, Texas

Federal Grantor: United States Department of Treasury. Assistance Listing Number: 21.027. Program: Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirement: Procurement and Suspension and Debarment. Questioned Cost: None. Finding type: Material Weakness. Criteria: According to 2 CFR 200.303, a non-federal entity should design and implement effective internal controls over each applicable compliance requirement for Federal awards. Condition: Non-federal entities are prohibited from contracting with vendors that are suspended or debarred and therefore should have internal controls designed and implemented to prevent noncompliance. During our testing, we noted an absence of procedures in place to prevent the City from contracting with parties that are suspended or debarred. Cause: During the past two years, the City has experienced turnover in its finance department and city management, leading to procedures over federal awards to become outdated. Effect: The City is at risk of contracting with vendors that are suspended or debarred. Recommendation: When entering into transactions with federal awards, the City should verify the vendors are not suspended or debarred. The verification may be accomplished by (1) ensuring that each vendor has not been listed as suspended or debarred on the System for Award Management (SAM.gov), (2) collecting a certification from the vendor, or (3) adding a clause or condition to the contract with the vendor. Management?s Response: The Finance Department is currently ensuring that each vendor has not been listed as suspended or debarred on the System for Award Management (SAM.gov). Purchasing verifies all procurements on federal grant programs prior to approval of any Purchase Order. This issue has been resolved as of September 1, 2022.