Pierce County Fire Protection District No. 3

BackgroundThe purpose of the Assistance to Firefighters Grant (AFG) program is to enhance the safety of the public and firefighters by providing direct financial assistance for critically needed resources that equip and train emergency personnel to recognized standards. During fiscal year 2020, the District spent $422,765 in AFG program funds to pay for training and purchase a fire truck and smoke alarm equipment.Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls.Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the District contracts for 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 is not suspended or debarred. The District can verify a contractor?s status by obtaining written certification from the contractor, or it can insert a clause into the contract stating the contractor is not suspended or debarred. Alternatively, the District can check the U.S. General Services Administration?s Excluded Parties List System (EPLS) through SAM.gov. The District must meet one of these requirements before awarding the contract, and it must keep documentation demonstrating compliance with this federal requirement.Description of ConditionThe District?s internal controls were ineffective for ensuring it complied with federal suspension and debarment verification requirements for all contracts of $25,000 or more.The District was aware of the requirement, and it has an established process where an employee performs the suspension and debarment check using the EPLS during the procurement process before awarding a contract. The employee is then required to print a copy of the search with a time stamp date at the bottom of the printout, which serves as the District?s evidence the contractor is not suspended or debarred. The District keeps this printout in the procurement file.For one of the two purchases made during the year, the District did not keep evidence of its SAM.gov search to show the contractor was not suspended or debarred.We consider this deficiency to be a material weakness, which led to material noncompliance.The issue was not reported as a finding in the prior audit.Cause of ConditionThe District could not demonstrate it followed its established process because it did not keep the EPLS printout.Effect of ConditionWithout adequate internal controls, the District cannot ensure the contractors it pays with federal funds are eligible to participate in federal programs. Any program funds the District paid to a suspended or debarred contractor would be unallowable and the grantor could recover them.During fiscal year 2020, the District used $49,532 of program funds to pay a contractor for smoke detectors. We did verify the contractor was not suspended or debarred, so we are not questioning these costs.RecommendationWe recommend the District strengthen its internal controls to ensure it verifies and keeps documentation showing that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred .District?s ResponseAuditor?s RemarksApplicable Laws and RegulationsTitle 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.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 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.Title 2 CFR Part 180, OMB Guidelines on Agencies on Government Wide Department and Suspension (Non procurement) establishes non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

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