Audit 307736

FINDING 2022-003 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): Account ID 20-1892-0-1-806 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. 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 (CSLFRF). Therefore, quarterly P&E Reports were due by January 31, 2022, and the last day of the month after the end of each quarter thereafter. 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 Grant Administrator prepared the P&E reports, and the County Auditor reviewed them prior to submission. Two of the four quarterly reports submitted during the audit period were selected for testing. The County utilized the current period obligations field to document total obligations less current period expenditures. For the reports tested, the current period obligations per the County's interpretation of the current period obligations field were not supported by the County's records. The following errors were noted: Quarter 2 P&E Report (April 1, 2022 - June 30, 2022)  The current period obligations for the Revenue Replacement project were overstated by $399,097. Quarter 3 P&E Report (July 1, 2022 - September 30, 2022)  The current period obligations for the Prairie Creek Water Run Water Line project were overstated by $67,773.  The current period obligations for the Parks Department - Latrine project were overstated by $25,758.  The current period obligations for the Foraker/Southwest project were overstated by $230,338. The lack of effective internal controls and noncompliance were systemic issues during the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 ELKHART 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Project and Expenditure Report User Guide, Appendix B - Bulk File Upload Overview, i) Project Baseline Template, states in part: "The downloadable templates provide all information required to create the upload files. The following table highlights the data elements required to complete the Project Baseline Template. . . ." Defined Term Definition Required/Optional/ Conditional List Values Data Type Max Length Current Period Obligations Total dollar value of obligations for this current reporting period Required N/A Currency N/A 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 was not designed or implemented by management of the County to ensure that policies and procedures were in place related to Reporting. 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. INDIANA STATE BOARD OF ACCOUNTS 21 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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, 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 CSLFRF 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. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop 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. Auditor's Response The County was able to provide documentation of communications with the Treasury detailing questions and issues with the reporting portal. Included within the communications between the County and the Treasury was the County's interpretation of the current obligations field and the Treasury's acceptance of this interpretation. However, as specified in the Condition and Context, the current obligations field did not follow this methodology. Furthermore, the County did not provide documentation or communication explaining the specific differences between the data in the P&E report and what the calculated amount should have been. We reaffirm our finding and will review the status of the finding during our next audit.

FINDING 2022-004 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): 400ARPHLTHISSCH Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 22 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Elkhart County Health Department (Health Department) was awarded the Health Issues and Challenges Grant (grant) through the Indiana Department of Health (IDOH). The grant was funded through the American Rescue Plan Act (ARPA) that focused on the improvement of chronic disease, and more specifically, elevated blood lead level reduction. The Health Department was required to submit data through the online portal, the National Electronic Disease Surveillance System (NEDSS) Base System (NBS), each month beginning in October 2022. The submitted data included program specific metrics related to patient case management of certified elevated blood lead levels. A Case Manager managed all aspects of an individual patient's care. A home visit and two assessments were completed by the Case Manager and input into the NBS. Once these steps were marked as complete in the NBS, the Clinical Manager reviewed each case and compiled data along with the cost reimbursement amount into a spreadsheet. The Clinical Manager provided the spreadsheet to the Manager of Administration who then completed and submitted the reimbursement invoice to the IDOH. The reimbursement invoice was submitted without a documented oversight, review, or approval process to ensure the accuracy of the data prior to submission. The lack of internal controls was a systemic issue throughout the audit period. 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the County to ensure the accuracy of the reimbursement invoices. 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. INDIANA STATE BOARD OF ACCOUNTS 23 ELKHART 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 policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure reimbursement invoices are complete and accurate prior to submission. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response While a segregation of duties existed within the process, a review or evaluation of data was never completed to ensure the data as compiled and entered was accurate and complete. The state's reviewal process prior to funds being disbursed to the County is a part of the state's internal control system, not the County's internal control system. We reaffirm our finding and will review the status of the finding during our next audit.

FINDING 2022-005 Subject: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) - Suspension and Debarment Federal Agency: Department of Health and Human Services Federal Program: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Assistance Listings Number: 93.104 Federal Award Number and Year (or Other Identifying Number): 1H79SM082981-01 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 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) funds, recipients are required to verify that 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 (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. INDIANA STATE BOARD OF ACCOUNTS 24 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements for the Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) funds, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. One covered transaction for funds passed through to a subrecipient was identified during the audit period. The amount passed through to the subrecipient was $914,863. The identified transaction was examined to determine if the County verified the suspension and debarment status of the subrecipient prior to payment. Upon review, we determined that the County entered into a memorandum of understanding (MOU) with the subrecipient on June 22, 2020. However, the County had not performed procedures to ensure the subrecipient was not suspended or debarred, or otherwise excluded or disqualified, from participation in federal assistance programs or activities at the time of the initial MOU or at any time during the audit period. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 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. 2 CFR 180.300 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 SAM Exclusions; 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." INDIANA STATE BOARD OF ACCOUNTS 25 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the County to ensure vendors were not suspended or debarred, or otherwise excluded, from participation in federal 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. As a result, a subrecipient to whom payments were made was 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-006 Subject: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) - Reporting Federal Agency: Department of Health and Human Services Federal Program: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Assistance Listings Number: 93.104 Federal Award Number and Year (or Other Identifying Number): 1H79SM082981-01 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The County entered into a memorandum of understanding (MOU) with Oaklawn Psychiatric Center, Inc. (Oaklawn) on June 22, 2020, covering a four-year period from August 31, 2020 to August 30, 2024. The MOU was for use of the Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) grant. During the audit period, $914,863 was passed through to Oaklawn (i.e., the subrecipient) as reimbursement for payment of services and other costs. INDIANA STATE BOARD OF ACCOUNTS 26 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) As the designated pass-through entity, the County's administrative responsibilities as outlined in the agreement included the submission of the annual Federal Financial Report (FFR) (SF-425) through the eRA Commons web-based platform. The FFR (SF-425) detailed cumulative balances of federal funds authorized and disbursed by the subrecipient during the grant period. In order to accumulate the required information for the FFR (SF-425), the County Health Department Manager of Administration worked in conjunction with subrecipient personnel. Subrecipient personnel submitted monthly financial information to the Manager of Administration, which was then used to compile the FFR (SF-425). The FFR (SF-425) was then submitted by the Manger of Administration without evidence of an oversight, review, or approval process to ensure the report was complete and accurate. The lack of internal controls was a systemic issue throughout the audit period. 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the County to ensure the County provided the state with complete and accurate information related to the Community Mental Health Services for Children with Serious Emotional Disturbances (SED) award. 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County establish a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure reports are complete and accurate prior to submission. 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 28

FINDING 2022-003 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): Account ID 20-1892-0-1-806 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. 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 (CSLFRF). Therefore, quarterly P&E Reports were due by January 31, 2022, and the last day of the month after the end of each quarter thereafter. 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 Grant Administrator prepared the P&E reports, and the County Auditor reviewed them prior to submission. Two of the four quarterly reports submitted during the audit period were selected for testing. The County utilized the current period obligations field to document total obligations less current period expenditures. For the reports tested, the current period obligations per the County's interpretation of the current period obligations field were not supported by the County's records. The following errors were noted: Quarter 2 P&E Report (April 1, 2022 - June 30, 2022)  The current period obligations for the Revenue Replacement project were overstated by $399,097. Quarter 3 P&E Report (July 1, 2022 - September 30, 2022)  The current period obligations for the Prairie Creek Water Run Water Line project were overstated by $67,773.  The current period obligations for the Parks Department - Latrine project were overstated by $25,758.  The current period obligations for the Foraker/Southwest project were overstated by $230,338. The lack of effective internal controls and noncompliance were systemic issues during the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 ELKHART 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Project and Expenditure Report User Guide, Appendix B - Bulk File Upload Overview, i) Project Baseline Template, states in part: "The downloadable templates provide all information required to create the upload files. The following table highlights the data elements required to complete the Project Baseline Template. . . ." Defined Term Definition Required/Optional/ Conditional List Values Data Type Max Length Current Period Obligations Total dollar value of obligations for this current reporting period Required N/A Currency N/A 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 was not designed or implemented by management of the County to ensure that policies and procedures were in place related to Reporting. 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. INDIANA STATE BOARD OF ACCOUNTS 21 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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, 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 CSLFRF 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. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop 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. Auditor's Response The County was able to provide documentation of communications with the Treasury detailing questions and issues with the reporting portal. Included within the communications between the County and the Treasury was the County's interpretation of the current obligations field and the Treasury's acceptance of this interpretation. However, as specified in the Condition and Context, the current obligations field did not follow this methodology. Furthermore, the County did not provide documentation or communication explaining the specific differences between the data in the P&E report and what the calculated amount should have been. We reaffirm our finding and will review the status of the finding during our next audit.

FINDING 2022-004 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): 400ARPHLTHISSCH Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 22 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Elkhart County Health Department (Health Department) was awarded the Health Issues and Challenges Grant (grant) through the Indiana Department of Health (IDOH). The grant was funded through the American Rescue Plan Act (ARPA) that focused on the improvement of chronic disease, and more specifically, elevated blood lead level reduction. The Health Department was required to submit data through the online portal, the National Electronic Disease Surveillance System (NEDSS) Base System (NBS), each month beginning in October 2022. The submitted data included program specific metrics related to patient case management of certified elevated blood lead levels. A Case Manager managed all aspects of an individual patient's care. A home visit and two assessments were completed by the Case Manager and input into the NBS. Once these steps were marked as complete in the NBS, the Clinical Manager reviewed each case and compiled data along with the cost reimbursement amount into a spreadsheet. The Clinical Manager provided the spreadsheet to the Manager of Administration who then completed and submitted the reimbursement invoice to the IDOH. The reimbursement invoice was submitted without a documented oversight, review, or approval process to ensure the accuracy of the data prior to submission. The lack of internal controls was a systemic issue throughout the audit period. 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the County to ensure the accuracy of the reimbursement invoices. 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. INDIANA STATE BOARD OF ACCOUNTS 23 ELKHART 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 policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure reimbursement invoices are complete and accurate prior to submission. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response While a segregation of duties existed within the process, a review or evaluation of data was never completed to ensure the data as compiled and entered was accurate and complete. The state's reviewal process prior to funds being disbursed to the County is a part of the state's internal control system, not the County's internal control system. We reaffirm our finding and will review the status of the finding during our next audit.

FINDING 2022-005 Subject: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) - Suspension and Debarment Federal Agency: Department of Health and Human Services Federal Program: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Assistance Listings Number: 93.104 Federal Award Number and Year (or Other Identifying Number): 1H79SM082981-01 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 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) funds, recipients are required to verify that 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 (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. INDIANA STATE BOARD OF ACCOUNTS 24 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements for the Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) funds, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. One covered transaction for funds passed through to a subrecipient was identified during the audit period. The amount passed through to the subrecipient was $914,863. The identified transaction was examined to determine if the County verified the suspension and debarment status of the subrecipient prior to payment. Upon review, we determined that the County entered into a memorandum of understanding (MOU) with the subrecipient on June 22, 2020. However, the County had not performed procedures to ensure the subrecipient was not suspended or debarred, or otherwise excluded or disqualified, from participation in federal assistance programs or activities at the time of the initial MOU or at any time during the audit period. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 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. 2 CFR 180.300 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 SAM Exclusions; 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." INDIANA STATE BOARD OF ACCOUNTS 25 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the County to ensure vendors were not suspended or debarred, or otherwise excluded, from participation in federal 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. As a result, a subrecipient to whom payments were made was 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-006 Subject: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) - Reporting Federal Agency: Department of Health and Human Services Federal Program: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Assistance Listings Number: 93.104 Federal Award Number and Year (or Other Identifying Number): 1H79SM082981-01 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The County entered into a memorandum of understanding (MOU) with Oaklawn Psychiatric Center, Inc. (Oaklawn) on June 22, 2020, covering a four-year period from August 31, 2020 to August 30, 2024. The MOU was for use of the Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) grant. During the audit period, $914,863 was passed through to Oaklawn (i.e., the subrecipient) as reimbursement for payment of services and other costs. INDIANA STATE BOARD OF ACCOUNTS 26 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) As the designated pass-through entity, the County's administrative responsibilities as outlined in the agreement included the submission of the annual Federal Financial Report (FFR) (SF-425) through the eRA Commons web-based platform. The FFR (SF-425) detailed cumulative balances of federal funds authorized and disbursed by the subrecipient during the grant period. In order to accumulate the required information for the FFR (SF-425), the County Health Department Manager of Administration worked in conjunction with subrecipient personnel. Subrecipient personnel submitted monthly financial information to the Manager of Administration, which was then used to compile the FFR (SF-425). The FFR (SF-425) was then submitted by the Manger of Administration without evidence of an oversight, review, or approval process to ensure the report was complete and accurate. The lack of internal controls was a systemic issue throughout the audit period. 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). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the County to ensure the County provided the state with complete and accurate information related to the Community Mental Health Services for Children with Serious Emotional Disturbances (SED) award. 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County establish a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure reports are complete and accurate prior to submission. 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 28