Audit 371135

Information on the federal program: Subject: Coronavirus State and Local Fiscal Recovery Funds – Internal Controls and Compliance Federal Agency: Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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 section 200.303 states in part: "The non-Federal entity must use one of the following methods of procurement… (b) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. Entities must obtain price or rate quotations from an adequate number of qualified sources to ensure full and open competition. In accordance with 2 CFR 200.214 and the government-wide requirements in 2 CFR Part 180, non-Federal entities are prohibited from contracting with or making subawards to parties that are suspended, debarred, or otherwise excluded from federal programs. This requirement applies to all contracts and procurements under federal awards, regardless of dollar amount, including those conducted under simplified acquisition procedures. Verification must be performed by checking the System for Award management (SAM.gov) or obtaining a written certification from the vendor. Condition: An effective internal control system was not in place at the District in order to ensure compliance with requirements related to the grant agreement and the simplified acquisitions procurement method of the Procurement and Suspension and Debarment compliance requirement. Cause: The District's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the District at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: There were two contracts subject to procurement and suspension and debarment during the year. For both procurements, the District could only provide final signed contracts and did not have evidence of the full bid process. For the first selection, the District provided the request for proposal but did not provide all bids that were received or a scoring rubric to support why the District selected the vendor. For the second selection, the request for proposal, bids received, and scoring rubric were not provided. Additionally, evidence of a suspension and debarment check for both selections was not available. The District did not have a formal procurement policy documented. Identification as a repeat finding: No Recommendation: We recommend that the District’s management establish controls related to the procurement process. The District should implement a formal procurement and suspension and debarment policy that states the process that is required for procurements based on the procurement amount. The policy should outline the requirement for a request for proposal, number of bids required, scoring rubric, and suspension and debarment check. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.