FINDING 2022-002
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY 2022
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
The County had not properly implemented a system of internal controls, which would include
appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting,
noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E)
Reports to the Department of the Treasury (Treasury). The reporting periods, as well as the respective due
dates, are based upon type of recipient and its population, as well as the recipient's allocation amount.
Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting
period.
The County was classified as a metropolitan county with a population below 250,000 residents that
received an allocation of more than $10 million in Coronavirus State and Local Fiscal Recovery Funds
(SLFRF) funding. As such, the initial P&E Report, covering three calendar quarters from March 3, 2021 to
December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent
quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day
of the month following the end of the period covered.
The County submitted four quarterly P&E Reports during the audit period. The County's process
for the completion and submission of the P&E Reports was that the County Attorney prepared each P&E
Report based on a spreadsheet prepared by the Board of County Commissioners Executive-Administrative
Assistant, and then the Chair of the Board of County Commissioners reviewed and submitted the reports.
One of the four quarterly reports was not properly supported by the County's records. For the final
quarterly report in 2022, the County did not include an expenditure of $1,500,000 as it was not included on
the spreadsheet prepared by the Board of County Commissioners Executive-Administrative Assistant.
INDIANA STATE BOARD OF ACCOUNTS 17
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The lack of internal controls and noncompliance were isolated to the final quarterly report in 2022.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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 the 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 the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page
10, states in part:
". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and
compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be
reported on a cash or accrual basis, as long as the methodology is disclosed and consistently
applied. Reporting must be consistent with the definition of expenditures pursuant to
2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling
and reporting accurate, compliant financial data, in accordance with appropriate accounting
standards and principles. . . ."
31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of
performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the
uses of funds."
Cause
A proper system of internal controls over the P&E Report was not designed by management of the
County to ensure the County provided the Treasury with complete and accurate information related to the
SLFRF awards. Embedded within a properly designed and implemented internal control system should be
internal controls consisting of policies and procedures. Policies reflect the County's management statements
of what should be done to effect internal controls, and procedures should consist of actions that
would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions
of the federal award could result in the loss of future federal funding to the County.
In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public
will not have access to transparent and accurate information regarding expenditures of federal awards.
Questioned Costs
There were no questioned costs identified.
INDIANA STATE BOARD OF ACCOUNTS
18
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the County design and implement a proper system of
internal controls, including policies and procedures to ensure that the County provides the Treasury with
complete and accurate information for the P&E Report.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds - Procurement and Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY 2022
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery
Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are
not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to,
contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that
are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties
List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered
transaction with that person.
The County's policies related to SLFRF suspension and debarment requirements included the
appropriate provisions for suspension and debarment be in the contract. Of the seven covered transactions,
totaling $3,881,545, identified that were paid from SLFRF funds during the audit period, all seven
were selected for testing to verify the County followed its procedures related to suspension and debarment.
Of the seven covered transactions tested, three did not follow the County's procedures as outlined
above. The three covered transactions, totaling $270,301, did not include the appropriate provisions in the
contracts nor did the County require a certification or check the EPLS to ensure the entity was not
suspended or debarred prior to making payment.
The lack of internal controls and noncompliance were isolated to the transactions noted above.
INDIANA STATE BOARD OF ACCOUNTS 19
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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 the 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 the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.214 Suspension and debarment states:
"Non-federal entities and contractors are 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."
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
The system of internal controls as established by management of the County was not properly
implemented to ensure that the policies and procedures in place related to suspension and debarment were
appropriately followed.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified
to be not suspended, debarred, or otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the County.
INDIANA STATE BOARD OF ACCOUNTS
20
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County establish a proper system of internal controls,
including strengthening its policies and procedures to ensure its compliance with requirements related to
suspension and debarment.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
INDIANA STATE BOARD OF ACCOUNTS
21
FINDING 2022-002
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY 2022
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
The County had not properly implemented a system of internal controls, which would include
appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting,
noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E)
Reports to the Department of the Treasury (Treasury). The reporting periods, as well as the respective due
dates, are based upon type of recipient and its population, as well as the recipient's allocation amount.
Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting
period.
The County was classified as a metropolitan county with a population below 250,000 residents that
received an allocation of more than $10 million in Coronavirus State and Local Fiscal Recovery Funds
(SLFRF) funding. As such, the initial P&E Report, covering three calendar quarters from March 3, 2021 to
December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent
quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day
of the month following the end of the period covered.
The County submitted four quarterly P&E Reports during the audit period. The County's process
for the completion and submission of the P&E Reports was that the County Attorney prepared each P&E
Report based on a spreadsheet prepared by the Board of County Commissioners Executive-Administrative
Assistant, and then the Chair of the Board of County Commissioners reviewed and submitted the reports.
One of the four quarterly reports was not properly supported by the County's records. For the final
quarterly report in 2022, the County did not include an expenditure of $1,500,000 as it was not included on
the spreadsheet prepared by the Board of County Commissioners Executive-Administrative Assistant.
INDIANA STATE BOARD OF ACCOUNTS 17
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The lack of internal controls and noncompliance were isolated to the final quarterly report in 2022.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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 the 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 the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page
10, states in part:
". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and
compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be
reported on a cash or accrual basis, as long as the methodology is disclosed and consistently
applied. Reporting must be consistent with the definition of expenditures pursuant to
2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling
and reporting accurate, compliant financial data, in accordance with appropriate accounting
standards and principles. . . ."
31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of
performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the
uses of funds."
Cause
A proper system of internal controls over the P&E Report was not designed by management of the
County to ensure the County provided the Treasury with complete and accurate information related to the
SLFRF awards. Embedded within a properly designed and implemented internal control system should be
internal controls consisting of policies and procedures. Policies reflect the County's management statements
of what should be done to effect internal controls, and procedures should consist of actions that
would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions
of the federal award could result in the loss of future federal funding to the County.
In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public
will not have access to transparent and accurate information regarding expenditures of federal awards.
Questioned Costs
There were no questioned costs identified.
INDIANA STATE BOARD OF ACCOUNTS
18
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the County design and implement a proper system of
internal controls, including policies and procedures to ensure that the County provides the Treasury with
complete and accurate information for the P&E Report.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds - Procurement and Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY 2022
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery
Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are
not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to,
contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that
are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties
List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered
transaction with that person.
The County's policies related to SLFRF suspension and debarment requirements included the
appropriate provisions for suspension and debarment be in the contract. Of the seven covered transactions,
totaling $3,881,545, identified that were paid from SLFRF funds during the audit period, all seven
were selected for testing to verify the County followed its procedures related to suspension and debarment.
Of the seven covered transactions tested, three did not follow the County's procedures as outlined
above. The three covered transactions, totaling $270,301, did not include the appropriate provisions in the
contracts nor did the County require a certification or check the EPLS to ensure the entity was not
suspended or debarred prior to making payment.
The lack of internal controls and noncompliance were isolated to the transactions noted above.
INDIANA STATE BOARD OF ACCOUNTS 19
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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 the 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 the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.214 Suspension and debarment states:
"Non-federal entities and contractors are 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."
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
The system of internal controls as established by management of the County was not properly
implemented to ensure that the policies and procedures in place related to suspension and debarment were
appropriately followed.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified
to be not suspended, debarred, or otherwise excluded.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the County.
INDIANA STATE BOARD OF ACCOUNTS
20
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County establish a proper system of internal controls,
including strengthening its policies and procedures to ensure its compliance with requirements related to
suspension and debarment.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
INDIANA STATE BOARD OF ACCOUNTS
21