Audit 370208

2024-001: Significant Deficiency Over Compliance with Procurement and Suspension and Debarment Federal Program: Highway Planning and Construction and Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number(s): 20.205 and 21.027 Federal Agency: U.S. Department of Transportation and U.S. Department of Treasury Pass-through Entity: Colorado Department of Transportation (20.205 only) Criteria: 2 CFR 200.319 states that all procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with Federal procurement standards. 2 CFR 200.214 states in part that recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations. In addition, 2 CFR 200.303 in part states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award. Condition: We have selected and tested vendors for suspension and debarment with expenditures in excess of $25,000 for the Bridge CR-397 and EMS projects for compliance with suspension and debarment. We identified that two vendors were not properly verified for suspension and debarment prior to the contract execution date. Cause: Internal controls over suspension and debarment were properly designed but not operating effectively to verify that all vendors are in compliance with suspension and debarment. Effect: Our testing identified that the County’s internal controls over compliance with suspension and debarment are not operating effectively, which may cause the County to be out of compliance with Federal and grant requirements. Repeat Finding: No. Recommendation: We recommend that the County re-evaluate the design of internal controls over suspension and debarment to be in compliance with the Federal requirements and the County’s procurement policy/procedures.

2024-003: Material Weakness Over Internal Controls with the Schedule Expenditures of Federal Awards Federal Program: Local Assistance and Tribal Consistency Fund and Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number(s): 21.032 and 21.027 Federal Agency: U.S. Department of Transportation and U.S. Department of Treasury Pass-through Entity: Colorado Department of Transportation (20.205 only) Criteria: 2 CFR 200.508 states that the auditee must prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements. In addition, 2 CFR 200.303 in part states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal awards. Condition: The expenditure amounts related to the 21.032 and 21.027 federal programs provided for the SEFA were materially misstated compared to the County’s accounting records. The County provides information to the auditors to assist with the preparation of the financial statements and the schedule of expenditure of federal awards. However, the information provided to the auditors for the SEFA did not match the information in the accounting records. Therefore, the County had material misstatements and prior year corrections (restatements) related to grants and federal awards. Cause: Lack of internal controls over financial reporting of the SEFA and federal expenditures.. Effect: This caused material audit adjustments to the financial statements and the significant corrections to the SEFA and potential for unidentified misstatements and lack of reporting of Federal awards on the SEFA. Repeat Finding: No. Recommendation: We recommend that the County establish internal controls over grants management and SEFA preparation processes during that year to make sure that the Federal expenditures are properly reflected on the information used to prepare the SEFA and match the accounting records.