Audit 386760

2024-002 – IMPROPER REPORTING OF EXPENDITURES - ALN 21.027 – OTHER NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY FINDING TYPE: OTHER NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY Finding 2024-002 Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Year(s): SLFRP5402, 2024 Federal Agency: U.S. Department of Treasury Pass Through Agency: North Dakota State Treasurer Office Questioned Cost: $0 Condition Morton County did not properly report expenditures on the March 31, 2024, Project and Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds program. The total cumulative expenditures were understated by $233,268. Context As stated in the SLFRF Compliance and Reporting Guidance for counties allocated less than $10 million with a population below 250,000 residents such as Morton County, "the initial Project and Expenditure Report covered the period from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30 each year." Therefore, each year after March 31, 2022, Morton County must then submit an annual P&E report for the period covering April 1 202X - March 31, 202Y. Morton County did submit the 2024 (period covering April 2023 - March 31, 2024) report by April 30, 2024, but did not properly include 6 expenses that were incurred between January 2024 - March 2024, totaling $233,268 on the 2024 P&E report. Effect The amounts reported as cumulative expenditures on the March 31, 2024, Project and Expenditure Report were inaccurate. Cause Morton County did not ensure that all expenditures were included when completing reporting for the March 31, 2024 Project and Expenditure Report. The County identified the misstatement after the P&E Report had been submitted. As Treasury does not allow revisions to submitted reports, the County was unable to amend the inaccurate report. Criteria Page 19 of the Coronavirus State and Local Fiscal Recovery Funds: Project and Expenditure Report User Guide Version 12 (September 30, 2024) states: • An expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). • 2 CFR 200.303 states that the non-Federal entity must 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. Repeat Finding No. Recommendation We recommend Morton County develop a review process that includes reconciling SLFRF expenditures to supporting documentation prior to preparing and submitting the P&E Report. Strengthening review steps will help ensure accurate reporting in accordance with Treasury and Uniform Guidance requirements. Morton County’s Response See Corrective Action Plan.

2024-003 –LACK OF CONTROLS OVER SUSPENSION AND DEBAREMENT - ALN 21.027 – SIGNIFICANT DEFICIENCY FINDING TYPE: SIGNIFICANT DEFICIENCY Finding 2024-003 Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Year(s): SLFRP5402, 2024 Federal Agency: U.S. Department of Treasury Pass Through Agency: North Dakota State Treasurer Office Questioned Cost: $0 Condition Morton County did not have documented policies in place to verify that vendors receiving federal funds were not suspended or debarred from participation in federal programs. During the audit period, the County did not perform checks of the federal System for Award Management (SAM.gov) or obtain certifications from vendors to demonstrate compliance with federal suspension and debarment requirements. Context During the audit period, Morton County entered one contract in the amount of $190,400. The vendor was not on the suspension and debarment listing on SAM.gov. Effect Without documented controls to verify vendor eligibility, the County was exposed to an increased risk of noncompliance with federal requirements. Although no instances of transactions with suspended or debarred parties were identified during audit testing, the lack of controls limits the County’s ability to demonstrate ongoing compliance with suspension and debarment regulations. Cause Morton County was not aware of the requirement to establish and document procedures specific to suspension and debarment compliance under the Uniform Guidance. As a result, controls and documentation practices were not implemented during the audit period. Criteria 2 CFR §200.214 and 2 CFR §180.300 require non-federal entities to verify that parties to covered transactions are not suspended or debarred prior to entering such transactions. Additionally, 2 CFR 200.303 states that the non-Federal entity must 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. Repeat Finding NO. Recommendation We recommend Morton County develop and implement documented procedures to verify vendor eligibility under federal suspension and debarment requirements prior to entering into contracts. Acceptable verification methods include SAM.gov checks, vendor certifications, or contract clauses, and documentation of compliance should be retained. Morton County’s Response See Corrective Action Plan.