FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2025 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended and debarred, or otherwise excluded. "Covered Transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by either; checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that vendor. The County had policies and procedures in place to verify that a vendor with which it planned to enter into a covered transaction was not suspended and debarred or otherwise excluded, but its policies and procedures were not effective in ensuring all vendors were verified. A sample of two vendors was selected for testing the suspension and debarment requirements; however, documentation supporting the County's compliance with its suspension and debarment verification policies was not provided for audit for either vendor selected. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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). . . ." 31 CFR 19.300 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 the EPLS, or (b) Collecting a certification from that person if allowed by this rule, or (c) Adding a clause or condition to the covered transaction with that person." Cause The system of internal controls established by management of the County was not implemented as designed, and employees lacked sufficient training to carry out suspension and debarment procedures required to certify vendor status. Effect Without the proper implementation of an effectively designed system of internal controls, the system was incapable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the County was not able to provide documentation that the suspension and debarment requirements were followed for two vendors to whom payment was equal to or in excess of $25,000 was made. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management establish a system of internal controls to ensure compliance with the grant agreements and the Procurement and Suspension and Debarment compliance requirement. Additionally, the County should ensure that all necessary personnel understand and follow the compliance requirements and County policies. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.