Audit 404527

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 and the Coronavirus Capital Projects Fund. Condition: The Town of Hopkinton has a 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 did not perform the procedure in fiscal year 2025 and 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 and the Coronavirus Capital Projects Fund were not suspended or debarred or otherwise excluded from participating in the transaction. . Cause: The Town did not follow 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. Questioned Costs: None Recommendation: We recommend that the Town perform established verification procedures to ensure that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded and maintain 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.

Criteria: Recipients of Coronavirus State and Local Fiscal Recovery Funds are subject to reporting requirements per OMB PRA Number 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 that is due on April 30. Condition: During our test of controls over compliance with reporting requirements, we noted that the Town’s Project and Expenditure Report for the annual period ending March 31, 2025 did not agree to the Town’s general ledger activity for the period April 1, 2024 – March 31, 2025 for all projects listed. Cause: The report was not reconciled to the general ledger. Effect: The amounts reported for total cumulative expenditures and current period expenditures for several projects were not accurate. Questioned Costs: None Recommendation: We recommend that reports submitted to Federal agencies be prepared from and reconciled to the general ledger.

Criteria – An entity is responsible for establishing and maintaining effective internal controls over compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal award programs. In addition, cost principles require that charges to federal award programs be supported by appropriate documentation including approved vouchers, vendor invoices or other documentation. Condition – The Town of Hopkinton has internal control policies and procedures in place to ensure compliance with activities allowed or unallowed, allowable costs/cost principles, and period of performance requirements. The Town’s internal controls over compliance with these requirements is the approval of the Town Manager and Finance Director on a payment voucher, which must be accompanied by a vendor invoice or other appropriate documentation to support the expenditure. During our test of internal controls over compliance with these requirements, we noted the following based on a sample of forty transactions: • Five payment vouchers were not properly approved by both the Town Manager and Finance Director. • Two transactions for reimbursements to the Town for Town employee salaries and benefits did not have appropriate documentation. Cause – The Town did not follow established internal control policies and procedures for payment voucher approval and did not have adequate documentation to support the salaries and benefits charged to federal awards. Effect – The Town has no documentation on file for these transactions to demonstrate compliance with internal control policies and procedures related to activities allowed or unallowed, allowable costs/cost principles, and period of performance requirements for these transactions. Questioned Costs – None Recommendation – We recommend that the Town ensure a properly approved payment voucher is prepared for all federal award program expenditures to ensure proper documentation of the internal control policies and procedures related to activities allowed or unallowed, allowable costs/cost principles, and period of performance compliance requirements. We also recommend that salaries and benefits charged to federal awards be supported by detailed time records approved by the Town Manager and Finance Director.