FINDING 2023-003
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 Number): 20-1892-0-1-806
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The County elected to receive the standard revenue loss allowance, allowing it to claim its total
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $3,723,354 as
revenue loss to use for government services. As such, all SLFRF program funds to date were expended
under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined
that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds
would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in
the case of the revenue loss portion of the award.
Prior to entering into subawards and covered transactions with the 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 related to the suspension and
debarment requirements. A population of 12 covered transactions, totaling $1,038,900, that equaled or
exceeded $25,000 paid from SLFRF funds were identified. Of the 12 covered transactions, there were 4,
totaling $441,145, that were selected for testing. For each of the 4 transactions, the County did not verify
the vendors' 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). . . ."
INDIANA STATE BOARD OF ACCOUNTS 18
PERRY COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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."
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 County's purchasing policy does not include procedures to verify suspension and debarment
status for covered transactions it intends to pay with federal funds.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County cannot 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 them.
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 recommend that management of the County strengthen its system of internal controls to ensure
that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or
debarred from participating in federal programs before entering into contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Fund - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Fund
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): 20-1892-0-1-806
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
Recipients are required to quarterly or annually submit 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 less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds (SLFRF) award funds. As such, the initial P&E report, covering the period from March 3, 2021 to
March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual
reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year.
The County submitted one P&E report during the audit period. Although the Deputy County Auditor
compiled the information for the report and the County Auditor reviewed and submitted the report, the
internal controls were not effective in preventing, or detecting and correcting, errors. As a result, the P&E
report contained the following errors:
The current period expenditures were overstated by $336,376.
The cumulative expenditures were understated by $18,624.
The lack of effective 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). . . ."
INDIANA STATE BOARD OF ACCOUNTS 20
PERRY COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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. . . ."
Cause
The County's internal controls were not effective to prevent and detect errors on the P&E report
prior to submission. The County did not insure that information reported was correct and applicable to the
reporting period of the submission.
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 such, the County did not accurately report current period expenditures and total
cumulative expenditures properly when filing the P&E report for the period from April 1, 2022 to March 31,
2023. Not properly reporting the information to the Treasury provides the Treasury with an inaccurate
picture of the County's activity for the reporting period.
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 develop policies and procedures to ensure the
County accurately reports current period and cumulative expenditures on the P&E report to the Treasury.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003
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 Number): 20-1892-0-1-806
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
The County elected to receive the standard revenue loss allowance, allowing it to claim its total
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $3,723,354 as
revenue loss to use for government services. As such, all SLFRF program funds to date were expended
under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined
that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds
would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in
the case of the revenue loss portion of the award.
Prior to entering into subawards and covered transactions with the 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 related to the suspension and
debarment requirements. A population of 12 covered transactions, totaling $1,038,900, that equaled or
exceeded $25,000 paid from SLFRF funds were identified. Of the 12 covered transactions, there were 4,
totaling $441,145, that were selected for testing. For each of the 4 transactions, the County did not verify
the vendors' 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). . . ."
INDIANA STATE BOARD OF ACCOUNTS 18
PERRY COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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."
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 County's purchasing policy does not include procedures to verify suspension and debarment
status for covered transactions it intends to pay with federal funds.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County cannot 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 them.
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 recommend that management of the County strengthen its system of internal controls to ensure
that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or
debarred from participating in federal programs before entering into contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Fund - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Fund
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): 20-1892-0-1-806
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
Recipients are required to quarterly or annually submit 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 less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds (SLFRF) award funds. As such, the initial P&E report, covering the period from March 3, 2021 to
March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual
reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year.
The County submitted one P&E report during the audit period. Although the Deputy County Auditor
compiled the information for the report and the County Auditor reviewed and submitted the report, the
internal controls were not effective in preventing, or detecting and correcting, errors. As a result, the P&E
report contained the following errors:
The current period expenditures were overstated by $336,376.
The cumulative expenditures were understated by $18,624.
The lack of effective 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). . . ."
INDIANA STATE BOARD OF ACCOUNTS 20
PERRY COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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. . . ."
Cause
The County's internal controls were not effective to prevent and detect errors on the P&E report
prior to submission. The County did not insure that information reported was correct and applicable to the
reporting period of the submission.
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 such, the County did not accurately report current period expenditures and total
cumulative expenditures properly when filing the P&E report for the period from April 1, 2022 to March 31,
2023. Not properly reporting the information to the Treasury provides the Treasury with an inaccurate
picture of the County's activity for the reporting period.
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 develop policies and procedures to ensure the
County accurately reports current period and cumulative expenditures on the P&E report to the Treasury.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.