FINDING 2025-001 Subject: WIC Special Supplemental Nutrition Program for Women, Infants, and Children - Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listings Number: 10.557 Federal Award Number and Year (or Other Identifying Number): Contract #88733 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters Condition and Context Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded from participation in federal programs. "Covered transactions" include, but are not limited to, contracts for goods or services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Verification may be performed by checking the System for Awarded Management (SAM), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County had established policies and procedures intended to ensure that an entity it intended to do business with was not suspended, debarred, or otherwise excluded prior to entering into a covered transaction. However, these procedures were not operating effectively, as not all vendors were verified. The County entered into two covered transactions totaling $119,706, both of which were selected for testing. For one of these transactions, totaling $72,656, the County did not verify the vendor's suspension and debarment status prior to entering into the covered transaction or making payment. The ineffective internal controls and noncompliance were isolated to the covered transactions described above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 JOHNSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County had policies and procedures in place to verify that vendors were not suspended or debarred or otherwise excluded from participating in federal programs which included obtaining a certification from vendors regarding their exclusion status. However, there were no procedures in place to ensure this was not unintentionally omitted for any vendor contracts. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that vendors paid with federal funds are eligible to participate in federal programs. Noncompliance with the suspension and debarment requirements could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation Management should develop procedures to ensure vendors are not suspended or debarred when expending federal funds. Appropriate documentation should be obtained and maintained to ensure compliance with suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.