FINDING 2023-002
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): ARP2021
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 COVID-19 - Coronavirus State
and Local Fiscal Recovery Funds (SLFRF) awards 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 expended 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 Town's policies related to the SLFRF suspension and debarment requirement did not include
checking the EPLS for vendor suspension and debarment. Three covered transactions were identified. All
three covered transactions were selected for testing. The three covered transactions, totaling $1,836,413,
did not include the appropriate provisions in the contracts, nor did the Town require a certification or check
the EPLS to ensure the entity was not suspended or debarred prior to making payment.
Additionally, the Town did not have a formalized procurement policy outlining its processes and
procedures with regards to the procurement of goods and services using federal grant funds. The policy
must conform to the procurement standards identified in 2 CFR 200.317 through 200.327 and should
address ensuring vendors are not suspended or debarred prior to entering into covered transactions if the
contract is expected to equal or exceed $25,000.
The lack of internal controls and noncompliance was a systemic issue throughout the audit period
and enabled material noncompliance to occur and remain undetected.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
INDIANA STATE BOARD OF ACCOUNTS 16
TOWN OF WHITESTOWN
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(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."
2 CFR 200.318(a) states:
"The non-Federal entity must have and use documented procurement procedures, consistent
with State, local, and tribal laws and regulations and the standards of this section, for the
acquisition of property or services required under a Federal award or subaward. The non-
Federal entity's documented procurement procedures must conform to the procurement
standards identified in §§ 200.317 through 200.327."
Cause
The system of internal controls as established by management of the Town was not properly
implemented to ensure that the policies and procedures in place related to suspension and debarment were
appropriately followed. The Town did not verify that the entities were not suspended or debarred prior to
entering into the covered transactions. In addition, management of the Town had not established a system
of internal controls, including policies and procedures, for the procurement of goods or services with federal
funds.
Effect
Without the proper implementation of an effectively designed system of internal controls, the Town
could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any
program funds the Town used to pay vendors that have been suspended or debarred would be unallowable,
and the funding agency could potentially recover them. In addition, procurements of goods or services
could have been noncompliant.
Questioned Costs
There were no questioned costs identified.
INDIANA STATE BOARD OF ACCOUNTS 17
TOWN OF WHITESTOWN
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended the Town strengthen its system of internal controls to ensure vendors 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 any covered transactions. We also recommended the Town adopt a
formal procurement policy for the purchase of goods or services with federal funds that complies with the
procurement standards outlined in the Code of Federal Regulations.
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 - 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): ARP2021
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 contract for the appropriate reporting period.
The Town was classified as a metropolitan town with a population below 250,000 residents that
received an allocation of less than $10 million in COVID-19 - 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 are 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 Town submitted one P&E report during the audit period timely; however, a single employee
prepared and submitted the P&E report without a review or oversight process in place to prevent, or detect
and correct, errors.
Only one annual report was required to be submitted by the Town. For the report tested, all activity
for the reporting period was not included, information submitted was not supported by the Town's records,
and the reports were not fairly presented. Errors identified included the following:
Annual Report (April 1, 2022 to March 31, 2023)
The Current Period Obligation and Total Cumulative Obligations were understated by
$33,855.
The Current Period and Total Cumulative Expenditures were understated by $33,855.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
INDIANA STATE BOARD OF ACCOUNTS
18
TOWN OF WHITESTOWN
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 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
Town to ensure the Town provided the Treasury with complete and accurate information related to the
SLFRF awards. The report that was submitted did not include all transactions from the beginning of 2023,
causing a variance with the ledger and what was reported on the P&E report.
Effect
Without the proper implementation of an effectively designed system of internal controls, the P&E
report submitted excluded transactions from the beginning of the reporting period which resulted in all key
line items being understated. 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
19
TOWN OF WHITESTOWN
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the Town design and implement a proper system of internal
controls, which includes a segregation of key function, to ensure that the Town 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 2023-002
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): ARP2021
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 COVID-19 - Coronavirus State
and Local Fiscal Recovery Funds (SLFRF) awards 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 expended 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 Town's policies related to the SLFRF suspension and debarment requirement did not include
checking the EPLS for vendor suspension and debarment. Three covered transactions were identified. All
three covered transactions were selected for testing. The three covered transactions, totaling $1,836,413,
did not include the appropriate provisions in the contracts, nor did the Town require a certification or check
the EPLS to ensure the entity was not suspended or debarred prior to making payment.
Additionally, the Town did not have a formalized procurement policy outlining its processes and
procedures with regards to the procurement of goods and services using federal grant funds. The policy
must conform to the procurement standards identified in 2 CFR 200.317 through 200.327 and should
address ensuring vendors are not suspended or debarred prior to entering into covered transactions if the
contract is expected to equal or exceed $25,000.
The lack of internal controls and noncompliance was a systemic issue throughout the audit period
and enabled material noncompliance to occur and remain undetected.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
INDIANA STATE BOARD OF ACCOUNTS 16
TOWN OF WHITESTOWN
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(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."
2 CFR 200.318(a) states:
"The non-Federal entity must have and use documented procurement procedures, consistent
with State, local, and tribal laws and regulations and the standards of this section, for the
acquisition of property or services required under a Federal award or subaward. The non-
Federal entity's documented procurement procedures must conform to the procurement
standards identified in §§ 200.317 through 200.327."
Cause
The system of internal controls as established by management of the Town was not properly
implemented to ensure that the policies and procedures in place related to suspension and debarment were
appropriately followed. The Town did not verify that the entities were not suspended or debarred prior to
entering into the covered transactions. In addition, management of the Town had not established a system
of internal controls, including policies and procedures, for the procurement of goods or services with federal
funds.
Effect
Without the proper implementation of an effectively designed system of internal controls, the Town
could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any
program funds the Town used to pay vendors that have been suspended or debarred would be unallowable,
and the funding agency could potentially recover them. In addition, procurements of goods or services
could have been noncompliant.
Questioned Costs
There were no questioned costs identified.
INDIANA STATE BOARD OF ACCOUNTS 17
TOWN OF WHITESTOWN
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended the Town strengthen its system of internal controls to ensure vendors 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 any covered transactions. We also recommended the Town adopt a
formal procurement policy for the purchase of goods or services with federal funds that complies with the
procurement standards outlined in the Code of Federal Regulations.
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 - 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): ARP2021
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 contract for the appropriate reporting period.
The Town was classified as a metropolitan town with a population below 250,000 residents that
received an allocation of less than $10 million in COVID-19 - 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 are 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 Town submitted one P&E report during the audit period timely; however, a single employee
prepared and submitted the P&E report without a review or oversight process in place to prevent, or detect
and correct, errors.
Only one annual report was required to be submitted by the Town. For the report tested, all activity
for the reporting period was not included, information submitted was not supported by the Town's records,
and the reports were not fairly presented. Errors identified included the following:
Annual Report (April 1, 2022 to March 31, 2023)
The Current Period Obligation and Total Cumulative Obligations were understated by
$33,855.
The Current Period and Total Cumulative Expenditures were understated by $33,855.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
INDIANA STATE BOARD OF ACCOUNTS
18
TOWN OF WHITESTOWN
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 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
Town to ensure the Town provided the Treasury with complete and accurate information related to the
SLFRF awards. The report that was submitted did not include all transactions from the beginning of 2023,
causing a variance with the ledger and what was reported on the P&E report.
Effect
Without the proper implementation of an effectively designed system of internal controls, the P&E
report submitted excluded transactions from the beginning of the reporting period which resulted in all key
line items being understated. 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
19
TOWN OF WHITESTOWN
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the Town design and implement a proper system of internal
controls, which includes a segregation of key function, to ensure that the Town 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.