Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - 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 Numbers): FY 2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
16
UNION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
Prior to entering into subawards and covered transactions with 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 did not have any policies or procedures in place for verifying that an entity with which
it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. A population
of two covered transactions, totaling $799,902, that equaled or exceeded $25,000 paid from SLFRF funds
were identified. Both covered transactions were selected for testing. For each of the transactions, the
County did not verify the vendor's suspension or debarment status prior to payment due to the County not
having any policies or procedures in place to verify that contractors were neither suspended nor debarred,
or otherwise excluded or disqualified, from participating in federal assistance programs or activities.
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). . . ."
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 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 County had not designed or implemented policies and procedures to verity that contractors
were not suspended or debarred, or otherwise excluded from participating in federal programs prior to
entering into covered transactions using SLFRF funds.
INDIANA STATE BOARD OF ACCOUNTS 17
UNION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County could not ensure contractors. The County could not ensure that contractors paid with federal funds
are eligible to participate in federal programs. Any program funds the County used to pay contractors that
have been suspended or debarred would be unallowable, and the funding agency could potentially recover
the funds.
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 that are paid $25,000 or more, all or in part with
federal funds, are not suspended, debarred, or otherwise excluded prior to entering into any contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - 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 Numbers): FY 2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
16
UNION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
Prior to entering into subawards and covered transactions with 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 did not have any policies or procedures in place for verifying that an entity with which
it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. A population
of two covered transactions, totaling $799,902, that equaled or exceeded $25,000 paid from SLFRF funds
were identified. Both covered transactions were selected for testing. For each of the transactions, the
County did not verify the vendor's suspension or debarment status prior to payment due to the County not
having any policies or procedures in place to verify that contractors were neither suspended nor debarred,
or otherwise excluded or disqualified, from participating in federal assistance programs or activities.
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). . . ."
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 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 County had not designed or implemented policies and procedures to verity that contractors
were not suspended or debarred, or otherwise excluded from participating in federal programs prior to
entering into covered transactions using SLFRF funds.
INDIANA STATE BOARD OF ACCOUNTS 17
UNION COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County could not ensure contractors. The County could not ensure that contractors paid with federal funds
are eligible to participate in federal programs. Any program funds the County used to pay contractors that
have been suspended or debarred would be unallowable, and the funding agency could potentially recover
the funds.
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 that are paid $25,000 or more, all or in part with
federal funds, are not suspended, debarred, or otherwise excluded prior to entering into any contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report