Audit 402982

Criteria - When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended, or debarred or otherwise excluded from participating in the transaction. “Covered transactions” include those procurement contracts for goods and services awarded under non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. This requirement applies to contracts entered into to procure goods and services with Coronavirus State and Local Fiscal Recovery Funds. Condition - The Town of Charlestown does not have a specific procedure in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. The Town also does not have documentation to support that the Town verified that the entities in which it entered into covered transactions to procure goods and services with Coronavirus State and Local Fiscal Recovery Funds were not suspended or debarred or otherwise excluded from participating in the transaction. Cause - The Town has not established suspension and debarment compliance policies and procedures for federal awards.Effect – Contracts for goods and service that were “covered transactions” were entered into prior to verifying that an entity was not suspended, debarred, or otherwise excluded and in those instances in which an entity was verified by the Town, the documentation to support that a verification was performed was not maintained.Questioned Costs – NoneRecommendation - We recommend that the Town implement verification procedures to ensure that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. The procedures should require documentation to support the verification process that was performed. The verification can include checking SAM.gov for exclusions, collecting a certification from the entity, or adding a clause or condition to contract with the entity.Auditee Views - It is crucial for the Town to implement verification procedures to ensure that any entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded.Corrective Action:1. Verification Procedures Implementation: The Town should establish verification procedures to confirm the eligibility of potential transaction partners. 2. Documented Verification Process: Develop a documented verification process outlining the steps to be taken to verify the status of potential transaction partners. This process should include checking relevant databases and contacting appropriate authorities, if necessary. This can be accomplished through the use of sam.gov to verify transaction partners current standing.3. Designated Responsible Party: Assign a designated responsible party within the Town administration to oversee the verification process.4. Integration into Transaction Process: Integrate the verification procedures into the Town's transaction approval process. Ensure that verification is completed before finalizing any covered transactions.5. Regular Review and Updates: Establish a schedule for regular review and updates of the verification procedures to ensure they remain effective and up-to-date with any changes in regulations or requirements.6. Training and Awareness: Provide training to relevant staff members involved in the transaction approval process to ensure they understand the importance of the verification procedures and their role in implementing them effectively.By implementing these corrective actions, the Town will enhance its compliance with regulations, mitigate the risk of engaging in transactions with excluded entities, and ensure the integrity of its procurement and contracting processes.Responsible Official: Patrick Gormley, TreasurerAnticipated Completion Date: June 30, 2026

Criteria- Recipients of Coronavirus State and Local Fiscal Recovery Funds are subject to reporting requirements per OMB PRA number -OMB #1505-0271 and the Uniform Guidance. The recipient should maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. The recipient should also establish control procedures to ensure accurate and timely submission of reports. The Town is required to submit a Project and Expenditure Report to the U.S. Treasury on an annual basis for the period April 1 through March 31 and it is due on April 30. Condition- The Town’s Project and Expenditure Report for the period ended March 31, 2025, was not accurate and did not agree to the underlying accounting records maintained to compile and report the data reported on the Project and Expenditure report. The current period obligations and current period expenditures per the Project and Expenditure Report did not agree to the accounting records for the period April 1, 2024 – March 31, 2025. Cause- The accounting records maintained by the Town to compile and report the data on the Project and Expenditure Report were accurate and complete, but the current obligations and expenditures were not reported accurately to the Project and Expenditure Report. The Town contracts with a consultant for assistance with the administration of the Coronavirus State and Local Fiscal Recovery Funds. This assistance includes preparing and submitting the Project and Expenditure Report. The Town provides the consultant the accounting records to prepare the Project and Expenditure Report but does not approve and submit the final report to the U.S. Treasury. The Town does not have control procedures to ensure accurate and timely submissions of reports.Effect – The current period obligations and expenditures reported on the Project and Expenditure Report were not accurate and consistent with the underlying accounting records.Questioned Costs – None Recommendation – We recommend that the Town implement control procedures for preparing federal financial assistance reports to ensure the reports reconcile with the underlying accounting records and are properly reviewed and approved prior to submission.Auditee Views - The Town acknowledges the finding related to the Project and Expenditure Report submitted under the Coronavirus State and Local Fiscal Recovery Funds program for the reporting period ended March 31, 2025. While the Town’s underlying accounting records used to support the report were accurate and complete, the amounts reported for current period obligations and expenditures did not agree to the Town’s accounting records.The Town utilizes a third-party consultant to assist with the administration, preparation, and submission of the Project and Expenditure Report. Although the Town provided accurate accounting information to the consultant, adequate internal control procedures were not in place to ensure that the final report submitted to the U.S. Treasury was reviewed, approved, and reconciled to the Town’s accounting records prior to submission.The Town takes this matter seriously and is committed to strengthening internal controls over the reporting process to ensure future compliance with federal reporting requirements.Corrective Action:The Town will implement the following corrective actions to address this finding:1. The Town will establish formal written procedures for the preparation, review, reconciliation, and submission of all federal reports, including the Project and Expenditure Report required under the Coronavirus State and Local Fiscal Recovery Funds program.2. Prior to submission, the Town Treasurer/Finance Office will perform and document a reconciliation of all reported obligations and expenditures to the Town’s underlying accounting records for the applicable reporting period.3. The Town will require management review and approval of all federal reports before submission to ensure completeness, accuracy, and compliance with federal requirements.4. The Town will work with its third-party consultant to clearly define responsibilities related to report preparation and submission and require the consultant to provide a final draft report for Town review and approval prior to filing with the U.S. Treasury.5. The Town anticipates these corrective actions will be fully implemented for all future federal reporting submissions beginning with the next required reporting cycle.Responsible Official: Patrick Gormley, TreasurerAnticipated Completion Date: June 30, 2026