Audit 363592

FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring 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): FY2024 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 HANCOCK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County received an allocation of the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) from the U.S. Department of the Treasury to support its response and recovery from the novel coronavirus. A portion of the County's allocation was then used to subaward funds to another entity (i.e., the subrecipient) to carry out an eligible use. The subaward was provided to the subrecipient via two different subaward agreements. Both subaward agreements were selected for testing. The County, as the pass-through entity, is to clearly identify the subaward and the terms and conditions of the award in the agreement with the subrecipient. During review of the two subaward agreements, it was determined that the Assistance Listings Number (ALN) and Federal Award Identification Number (FAIN) were not included as required. Additionally, the County as the pass-through entity, is to monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes in compliance with federal statutes, regulations, and terms and conditions of the subaward and that performance goals are achieved. Part of the monitoring requirements include verifying the subrecipient received an audit as required so as to be able to issue management decisions on any findings, as applicable. The County did not have a process in place to obtain and review audits received by the subrecipient. Therefore, the County would not have been able to issue management decisions or ensure timely and appropriate action by the subrecipient. The lack of internal controls and noncompliance were systemic 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 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); INDIANA STATE BOARD OF ACCOUNTS 14 HANCOCK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date . . . of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R & D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used charged) per § 200.414. . . . (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations." Cause The County did not have adequate processes or procedures in place to ensure all of the proper information about the grant was provided to the subrecipient and all required monitoring activities were being conducted. Effect Not providing award identification information to subrecipients could result in the subrecipient not properly reporting the grant on their Schedule of Expenditures of Federal Awards. Furthermore, due to the absence of policies and procedures to monitor the activities of subrecipients, subrecipients could be spending federal funds for unauthorized purposes without the County's knowledge. As such, the County cannot ensure proper accountability and compliance with the program requirements. INDIANA STATE BOARD OF ACCOUNTS 15 HANCOCK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County strengthen its system of internal controls to ensure that the County verifies that all subrecipients of federal awards receive an audit and that the County receives and reviews any audit reports of the subrecipients. Additionally, we recommended that the County strengthen its system of internal controls to ensure that subaward agreements include all required information that should be known to the subrecipient. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring 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): FY2024 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 HANCOCK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County received an allocation of the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) from the U.S. Department of the Treasury to support its response and recovery from the novel coronavirus. A portion of the County's allocation was then used to subaward funds to another entity (i.e., the subrecipient) to carry out an eligible use. The subaward was provided to the subrecipient via two different subaward agreements. Both subaward agreements were selected for testing. The County, as the pass-through entity, is to clearly identify the subaward and the terms and conditions of the award in the agreement with the subrecipient. During review of the two subaward agreements, it was determined that the Assistance Listings Number (ALN) and Federal Award Identification Number (FAIN) were not included as required. Additionally, the County as the pass-through entity, is to monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes in compliance with federal statutes, regulations, and terms and conditions of the subaward and that performance goals are achieved. Part of the monitoring requirements include verifying the subrecipient received an audit as required so as to be able to issue management decisions on any findings, as applicable. The County did not have a process in place to obtain and review audits received by the subrecipient. Therefore, the County would not have been able to issue management decisions or ensure timely and appropriate action by the subrecipient. The lack of internal controls and noncompliance were systemic 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 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); INDIANA STATE BOARD OF ACCOUNTS 14 HANCOCK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date . . . of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R & D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used charged) per § 200.414. . . . (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations." Cause The County did not have adequate processes or procedures in place to ensure all of the proper information about the grant was provided to the subrecipient and all required monitoring activities were being conducted. Effect Not providing award identification information to subrecipients could result in the subrecipient not properly reporting the grant on their Schedule of Expenditures of Federal Awards. Furthermore, due to the absence of policies and procedures to monitor the activities of subrecipients, subrecipients could be spending federal funds for unauthorized purposes without the County's knowledge. As such, the County cannot ensure proper accountability and compliance with the program requirements. INDIANA STATE BOARD OF ACCOUNTS 15 HANCOCK COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County strengthen its system of internal controls to ensure that the County verifies that all subrecipients of federal awards receive an audit and that the County receives and reviews any audit reports of the subrecipients. Additionally, we recommended that the County strengthen its system of internal controls to ensure that subaward agreements include all required information that should be known to the subrecipient. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.