Audit 405335

Department of Treasury, State of Indiana Office of Community and Rural Affairs, Federal Financial Assistance Listing 21.029, AL192-23-NLC-23-103, AL192-23-NLC-25-104 A, AL192-23-NLC-25-104 B Coronavirus Capital Projects Fund Preparation of Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the accompanying notes to the schedule. Condition: The Entity does not have an internal control system designed to provide for a complete and accurate schedule of federal expenditures of federal awards being audited. As auditors, we were requested to assist with the preparation of the schedule and accompanying notes to the schedule. Cause: Auditor assistance with preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Entity meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Entity would not be able to draft a complete and accurate schedule. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Entity is aware of this condition for financial reporting requirements relating to the Entity’s schedule of expenditures of federal awards and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Treasury, State of Indiana Office of Community and Rural Affairs, Federal Financial Assistance Listing 21.029, AL192-23-NLC-23-103, AL192-23-NLC-25-104 A, AL192-23-NLC-25-104 B Coronavirus Capital Projects Fund Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to Uniform Guidance standards in sections 2 CFR 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: • The Entity’s formally documented procurement policy was missing the required elements detailed under Uniform Guidance • Four instances where the Entity did not follow the procurement process and did not have any formal documentation in place with the vendors. • Four instances where the Entity entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: The Entity was not aware of the federal procurement requirements. Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Entity would be noncompliant with the compliance requirements outlined above. Additionally, the Entity may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 out of 10 vendors were selected for testing. Repeat Finding form Prior Year: No Recommendation: We recommend the Entity update their procurement policy to ensure it includes all the required elements in accordance with Uniform Guidance. In addition, we suggest that management implement procedures and control processes related to the review of procurement to ensure the procurement methods are being followed and documentation is retained to support compliance. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government prior to entering into a procurement transaction. Views of Responsible Officials: Management agrees with the finding.