CITY OF THORNTON

Finding 2024-002: Suspension and Debarment Assistance Listing Program Title: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Program Number: 21.027 Federal Agency: U.S. Department of the Treasury Award Year: 2024 Criteria: The Federal Government requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. In addition, per the Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The City does not have adequate controls in place to ensure that suspension and debarment compliance requirements are met. Cause: Although the City does have a process in place for verifying vendors paid with federal funds are not suspended or debarred from receiving federal funds, this verification took place after a contract was entered into with the vendor instead of before. Effect or Potential Effect: In the absence of appropriate controls, the City could enter into a contract with a vendor or subrecipient that is suspended or debarred from participating in federal programs, which would result in noncompliance with federal program requirements. Questioned Costs: None. Context: Out of a sample of four vendors where suspension and debarment checks were completed by the City, this verification was not completed prior to the City entering into contracts with those vendors. Identification as a Repeat Finding, If Applicable: Not Applicable Recommendation: We recommend the City implement procedures to properly ensure that suspension and debarment verification occurs prior entering into a covered transaction with a vendor that receives federal funds. View of Responsible Officials: Management agrees with this finding.

Federal Awards Finding 2024-002: Suspension and Debarment Finding: The City receives State and Local Fiscal Recovery Funds (SLFRF) from the U.S. Treasury as outlined in the American Rescue Plan Act (ARPA). In 2024, the City originally planned to utilize the ‘revenue replacement’ provision in ARPA and did not interpret the guidance at that time to require the check for suspension and debarment but rather thought that revenue replacement provision would require the City only to conduct “business as usual” regarding purchasing, acquisitions and contracts. However, after the first single audit was completed and new guidance was released by the treasury, it was determined that this requirement was needed and as all the contracts and purchases had been entered into or were at a stage where they could not be checked prior to award it was determined that prior to submitting any expenses to the treasury, each quarter that suspension and debarment checks would be done on any vendors/contracts with a purchase or contract greater than $25,000. Corrective Actions Taken or Planned: As there is no opportunity to correct this since all contracts are already in place for the ARPA SLFRF, we will continue to check for suspension and debarment each quarter before submitting the expenses to the Treasury and will not submit any expenses related to vendors or contractors that are suspended or debarred. We will implement a review by the controller to make sure that the suspension and debarment check is being done quarterly and will document such review. All other contracts and awards related to federal funds will continue to have the suspension and debarment check performed by the contracts and purchasing department before issuance of the contract or award. Anticipated Date of Implementation/Completion: July 31, 2025 Name of contact person responsible for correction action: Doug Farmen, Controller