2024-014 Noncompliance with Suspension and Debarment Requirements Grantor Environmental Protection Agency – Assistance Listing 66.458 Clear Water State Revolving Fund Passed through Louisiana Department of Environmental Quality – Number CS-221732.01 Grant Period – Year ended June 30, 2024 First reported 2024 Type Material Weakness, Noncompliance Condition The Town failed to establish a policy to outline procedures to be completed to identify contractors that are suspended or debarred. Additionally, the construction contract did not include a compliance clause in the contract, the Town did not obtain certifications from contractors regarding their suspension or debarment status, nor did it document searches conducted in the System for Award Management (SAM) Exclusions to verify contractor eligibility. We did search the list and did not find the contractor. Criteria According to the Uniform Guidance, nonfederal entities must verify that contractors are not suspended, debarred, or otherwise excluded from participating in federal programs. This can be achieved by checking the SAM Exclusions, obtaining a certification from the contractor, or including a compliance clause in the contract. Furthermore, entities must document the verification process. Cause The Town did not have adequate procedures in place to ensure compliance with federal suspension and debarment requirements. Effect The lack of proper verification and documentation could result in the Town engaging with ineligible contractors, potentially leading to noncompliance with federal regulations and jeopardizing federal funding. Questioned Costs None Recommendation It is recommended that the Town develop and implement a policy to verify the suspension and debarment status of contractors. This policy should include procedures for checking the SAM Exclusions, obtaining necessary certifications, and documenting the verification process. Additionally, training should be provided to staff responsible for procurement to ensure understanding and compliance with these requirements. Management Response See management’s corrective action plan.
2024-015 Noncompliance with Cash Management Requirements Grantor Environmental Protection Agency – Assistance Listing 66.458 Clear Water State Revolving Fund Passed through Louisiana Department of Environmental Quality – Number CS-221732.01 Grant Period – Year ended June 30, 2024 First reported 2024 Type Material Weakness, Noncompliance Condition The Town allowed an excessive number of days to lapse between the receipt of federal funds and the subsequent payment to the engineer and contractor. This delay in disbursement is not in compliance with the cash management requirements. During the year ended June 30, 2024, the Town received funds three times as follows: Criteria According to the Uniform Guidance, nonfederal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and the disbursement by the nonfederal entity for direct program or project costs and the proportionate share of allowable indirect costs. Cause The Town did not have adequate procedures in place to ensure timely disbursement of federal funds upon receipt. Effect The delay in disbursement could result in inefficient use of federal funds and potential noncompliance with federal cash management requirements, which may lead to financial penalties or interest liabilities. Questioned Costs $311,159 Recommendation It is recommended that the Town develop and implement procedures to ensure that federal funds are disbursed promptly upon receipt. This may include setting specific timelines for processing payments and monitoring compliance with these timelines. Additionally, training should be provided to staff responsible for cash management to ensure understanding and adherence to these requirements. Management Response See management’s corrective action plan.
2024-016 Noncompliance with Build America, Buy America Act (BABA) Requirements Grantor Environmental Protection Agency – Assistance Listing 66.458 Clear Water State Revolving Fund Passed through Louisiana Department of Environmental Quality – Number CS-221732.01 Grant Period – Year ended June 30, 2024 First reported 2024 Type Material Weakness, Noncompliance Condition The Town failed to include any provisions or policies related to the Build America, Buy America Act (BABA) in their procurement policies. Additionally, the Town did not document any procedures performed to ensure compliance with BABA requirements for federally funded infrastructure projects. Criteria The BABA Act requires that all iron, steel, manufactured products, and construction materials used in federally funded infrastructure projects be produced in the United States. These requirements must be incorporated into the terms and conditions of each award with an infrastructure project. Cause The Town did not update its procurement policies and procedures to reflect the requirements of the BABA Act, possibly due to a lack of awareness or understanding of the new regulations. Effect The absence of BABA-related policies and procedures could result in noncompliance with federal requirements, potentially leading to the use of non-domestic materials in infrastructure projects and jeopardizing federal funding. Questioned Costs None Recommendation It is recommended that the Town revise its procurement policies to include the requirements of the BABA Act. This should involve developing and documenting procedures to ensure that all materials used in federally funded infrastructure projects comply with BABA requirements. Training should also be provided to relevant staff to ensure understanding and compliance with these requirements. Management Response See management’s corrective action plan.
2024-017 Noncompliance with Allowable Costs Requirements - Duplicate Payments Grantor Department of Treasury - Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Grant Period – Year ended June 30, 2024 First reported 2024 Type Material Weakness, Noncompliance Condition The Town used $53,786 from the 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program to match expenditures in another federal program that is not a major program. This amount was subsequently reimbursed by the other federal program, resulting in a duplicate payment. Criteria According to the cost principles outlined in 2 CFR part 200, subpart E, costs charged to federal awards must be necessary, reasonable, and allocable to the federal award. Costs must not include improper payments, such as duplicate payments, which are payments made more than once for the same good or service. Cause The Town did not have adequate controls in place to prevent the use of SLFRF funds for expenditures that were subsequently reimbursed by another federal program, leading to a duplicate payment. Effect The Town's use of SLFRF funds for expenditures that were reimbursed by another federal program resulted in noncompliance with the allowable costs requirements, specifically the prohibition of duplicate payments. The Town may be required to return the funds. Questioned Costs $53,786 Recommendation The Town should implement stronger internal controls to ensure that costs charged to federal awards do not include duplicate payments. This includes verifying that expenditures reimbursed by other federal programs are not also charged to the SLFRF program. Management's Response See management’s corrective action plan.
2024-018 Noncompliance with Procurement Requirements Grantor Department of Treasury - Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Grant Period – Year ended June 30, 2024 First reported 2024 Type Material Weakness, Noncompliance Condition During the audit of the procurement processes, it was identified that the Town may not have fully complied with the federal regulations governing procurement. During the year ended December 31, 2024, the Town paid one contractor a sum of $85,476 for water and sewer system repairs as necessary. The Town did not provide a contract for audit or evidence that it obtained price or rate quotations from an adequate number of qualified sources. Criteria Federal regulations generally require procurement transactions to be conducted in a manner that provides full and open competition, unless specific exceptions apply. Contracts are typically necessary to formalize the procurement relationship and ensure compliance with federal statutes, regulations, and the terms and conditions of a federal award. According to 2 CFR section 200.320, the micro-purchase method allows for procurements where the aggregate dollar amount does not exceed $10,000, and these purchases may be awarded without soliciting competitive quotations if the nonfederal entity considers the price to be reasonable. For small purchase procedures, which apply to purchases exceeding the micro-purchase amount but not exceeding the simplified acquisition threshold of $250,000, price or rate quotations must be obtained from an adequate number of qualified sources. Cause Management believed the requirement for small purchases did not apply to routine water and sewer system repairs since the individual invoices did not exceed $10,000 in most cases. Effect Noncompliance may lead to the disallowance of costs, where the federal agency may refuse to reimburse noncompliant costs or require refunds. Questioned Costs $85,476 Recommendation To ensure compliance with federal procurement standards, it is recommended that the Town implement procedures to ensure that price or rate quotations are obtained from an adequate number of qualified sources for all small purchases, thereby promoting full and open competition. Management's Response See management’s corrective action plan.
2024-019 Non-Compliance with Reporting Requirements for SLFRF Program Grantor Department of Treasury - Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Grant Period – Year ended June 30, 2024 First reported 2024 Type Material Weakness, Noncompliance Condition The Town did not provide the auditor with any reports for the State and Local Fiscal Recovery Funds (SLFRF) program for the year ended June 30, 2024. Criteria Entities receiving funds under the State and Local Fiscal Recovery Funds (SLFRF) program are required to submit performance reports at least annually. These reports must be prepared in a format authorized by the Office of Management and Budget (OMB). Cause The failure may be due to a lack of understanding of the reporting requirements or inadequate internal controls over financial reporting. Effect The absence of the required reports impedes the auditor's ability to verify the proper use of SLFRF funds and assess compliance with federal requirements. This non-compliance could result in questioned costs and potential repercussions from federal oversight bodies. Questioned Costs None Recommendation In the immediate future, we recommend the following: 1. Seek an Extension: Contact the cognizant or oversight agency for audit to request an extension. Extensions may be granted if the original deadline imposes an undue burden on the Town. 2. Communicate with the Agency: Explain the reasons for the delay to the relevant agency and seek guidance on corrective actions. This communication can help in obtaining an extension or understanding any penalties. 3. Submit the Report Promptly: Even if the deadline has been missed, submit the report as soon as possible to minimize negative consequences and demonstrate a commitment to compliance. In the future, the Town should establish and implement procedures to ensure compliance with grant reporting requirements. Management's Response See management’s corrective action plan.