FINDING 2022-005
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 Numbers and Years (or Other Identifying Numbers): Regular FY 2022, Revenue
Loss FY 2022
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
27
LA PORTE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the County in order to ensure compliance with requirements related to the grant agreement and the
Reporting compliance requirement.
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 of more 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 were to cover one calendar quarter and must be submitted to the Treasury by
the last day of the month following the end of the period covered.
The County submitted four quarterly P&E Reports during the audit period. The County's process
for the completion and submission of the P&E Reports was that the County Auditor prepared each P&E
Report based on the County's Financial Ledgers without a proper oversight or review process in place prior
to submission.
All four quarterly reports that were due during the audit period were not properly supported by the
County's records and contained the following errors:
The 2021 Quarter 4 P&E Report period expenditures were overstated by $159,541.
The 2022 Quarter 1 P&E Report period expenditures were understated by $15,375.
The 2022 Quarter 2 P&E Report period expenditures were understated by $21,109.
The 2022 Quarter 3 P&E Report period expenditures were overstated by $216,216.
The lack of internal controls and noncompliance occurred 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
28
LA PORTE 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. . . ."
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 to ensure the amounts
reported were accurate.
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 provision of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of federal funding to the County.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the management of the County establish a system of internal controls and
develop policies and procedures over the preparation and review of federal reports to ensure appropriate
reviews, approval, 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 all
reports.
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: 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 Numbers and Years (or Other Identifying Numbers): Regular FY 2022, Revenue
Loss FY 2022
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2021-006.
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the County in order to ensure compliance with requirements related to the grant agreement and the
Procurement and Suspension and Debarment compliance requirement.
Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and
Local Fiscal Recovery Funds (SLFRF), 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 Excluded Parties List System (ELPS), collection of a certification from that person or entity, or adding a
clause or condition to the covered transaction with that person or entity.
Upon inquiring of the County to determine its policies and procedures related to suspension and
debarment requirements for the SLFRF funds, the County stated procedures were not in place to ensure
vendors were not suspended or debarred prior to entering into covered transactions.
The County had not performed procedures to ensure the vendors were not suspended or debarred
or otherwise excluded or disqualified from participation in federal assistance programs or activities during
the audit period on all of the four vendors tested that were paid with SLFRF funds which totaled $1,085,986.
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:
INDIANA STATE BOARD OF ACCOUNTS
30
LA PORTE COUNTY
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."
Cause
Management of the County did not develop a system of internal controls to ensure that policies and
procedures related to suspension and debarment were in place and followed.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, vendors to whom payments are equal to or in excess of $25,000 were not
verified to not be suspended, debarred, or otherwise excluded. 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. Furthermore, 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,
including policies and procedures to ensure its compliance with requirements related to suspension and
debarment.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005
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 Numbers and Years (or Other Identifying Numbers): Regular FY 2022, Revenue
Loss FY 2022
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
27
LA PORTE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the County in order to ensure compliance with requirements related to the grant agreement and the
Reporting compliance requirement.
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 of more 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 were to cover one calendar quarter and must be submitted to the Treasury by
the last day of the month following the end of the period covered.
The County submitted four quarterly P&E Reports during the audit period. The County's process
for the completion and submission of the P&E Reports was that the County Auditor prepared each P&E
Report based on the County's Financial Ledgers without a proper oversight or review process in place prior
to submission.
All four quarterly reports that were due during the audit period were not properly supported by the
County's records and contained the following errors:
The 2021 Quarter 4 P&E Report period expenditures were overstated by $159,541.
The 2022 Quarter 1 P&E Report period expenditures were understated by $15,375.
The 2022 Quarter 2 P&E Report period expenditures were understated by $21,109.
The 2022 Quarter 3 P&E Report period expenditures were overstated by $216,216.
The lack of internal controls and noncompliance occurred 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
28
LA PORTE 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. . . ."
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 to ensure the amounts
reported were accurate.
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 provision of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of federal funding to the County.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the management of the County establish a system of internal controls and
develop policies and procedures over the preparation and review of federal reports to ensure appropriate
reviews, approval, 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 all
reports.
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: 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 Numbers and Years (or Other Identifying Numbers): Regular FY 2022, Revenue
Loss FY 2022
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2021-006.
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the County in order to ensure compliance with requirements related to the grant agreement and the
Procurement and Suspension and Debarment compliance requirement.
Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and
Local Fiscal Recovery Funds (SLFRF), 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 Excluded Parties List System (ELPS), collection of a certification from that person or entity, or adding a
clause or condition to the covered transaction with that person or entity.
Upon inquiring of the County to determine its policies and procedures related to suspension and
debarment requirements for the SLFRF funds, the County stated procedures were not in place to ensure
vendors were not suspended or debarred prior to entering into covered transactions.
The County had not performed procedures to ensure the vendors were not suspended or debarred
or otherwise excluded or disqualified from participation in federal assistance programs or activities during
the audit period on all of the four vendors tested that were paid with SLFRF funds which totaled $1,085,986.
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:
INDIANA STATE BOARD OF ACCOUNTS
30
LA PORTE COUNTY
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."
Cause
Management of the County did not develop a system of internal controls to ensure that policies and
procedures related to suspension and debarment were in place and followed.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. As a result, vendors to whom payments are equal to or in excess of $25,000 were not
verified to not be suspended, debarred, or otherwise excluded. 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. Furthermore, 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,
including policies and procedures to ensure its compliance with requirements related to suspension and
debarment.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.