FINDING 2025-003 Subject: Highway Planning and Construction - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Numbers and Years (or Other Identifying Numbers): DES 1400550, DES 1700788, DES 2100081 Pass-Through Entity: Indiana Department of Transportation Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the County in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The County had not properly designed or implemented a system of internal controls that would be effective in preventing, or detecting and correcting, noncompliance to ensure that expenses reimbursed with Highway Planning and Construction monies were not charged to another federal grant. INDIANA STATE BOARD OF ACCOUNTS 18 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The following instances of noncompliance were identified during the audit of project DES 1700788: Duplicate Federal Funding (Double Dipping): Two of eight expenses sampled from the Highway Planning and Construction program were found to be originally charged to the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) federal program (ALN 21.027) and subsequently submitted and received as reimbursement through the Highway Planning and Construction program. A further comprehensive review of Highway Planning and Construction funds reimbursed in 2025 revealed that $965,722 in expenditures originally charged to the SLFRF in 2024 was subsequently requested and received as a reimbursement through Highway Planning and Construction in 2025. Additionally, $17,000 in expenditures originally charged to the SLFRF in 2025 was subsequently requested and received as a reimbursement through Highway Planning and Construction in 2025. Duplicate Project Reimbursement Requests: One check was included in two separate Highway Planning and Construction reimbursement claims, resulting in the County receiving duplicate payments for the exact same expenditure under the Highway Planning and Construction program in 2025. The lack of an effective internal control system was systemic throughout the audit period, while the identified noncompliance was specific to project DES 1700788. Total known questioned costs, resulting from the duplicate federal funding, equal $982,722. 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). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. . . ." 2 CFR 200.405(c) states in part: "Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards . . ." 2 CFR 200.402 states: "The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs minus any applicable credits." INDIANA STATE BOARD OF ACCOUNTS 19 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County did not establish, implement, and enforce a formal grant management and review process capable of cross-referencing ledger expenditures between different federal grants. Furthermore, the County lacked a tracking mechanism to flag individual vendor checks and invoices to prevent them from being submitted for reimbursement multiple times. Effect Without a proper system of internal controls in place that operated effectively, the County requested and received reimbursement for $982,722 from the Highway Planning and Construction program that had already been charged to the SLFRF federal program. Additionally, the County asked for reimbursement for the same check on two different reimbursement claims. Questioned Costs Questioned costs in the amount of $982,722 were identified as described in the Condition and Context. Recommendation We recommended that County management implement an effective internal control system and formal procedures to prevent duplicate reimbursement requests across different grant programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-004 Subject: Highway Planning and Construction - Procurement Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Numbers and Years (or Other Identifying Numbers): DES 1400550, DES 1700788, DES 2100081 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context The County, acting as the Local Public Agency (LPA), did not maintain adequate internal controls over its procurement process for professional engineering and consulting contracts funded by the Highway Planning and Construction program. Specifically, for the consulting contracts reviewed during the audit period, the designated Employee in Responsible Charge was the sole individual documented as responsible for completing, reviewing, and submitting the LPA Selection Checklist to the Indiana Department of Transportation (INDOT). No secondary review, approval, or independent verification of the checklist or the required contract reporting items was documented or presented for audit. INDIANA STATE BOARD OF ACCOUNTS 20 FLOYD 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). . . ." Cause No documentation was provided to ensure a proper internal control process that would include an independent oversight review or dual-signature sign-off on the LPA Selection Checklist prior to its submission to the INDOT. During the audit period, the County office responsible for the Highway Planning and Construction program experienced staff turnover, resulting in a breakdown of internal controls. Effect The lack of an effective internal control could lead to material noncompliance going undetected. This lack of documented internal controls constitutes a material weakness in internal control over compliance. Material noncompliance could lead to loss of federal funding for the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County management establish an internal control system and formal procedures to ensure consulting contracts are properly procured and that the LPA Selection Checklist review is thoroughly documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and 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): FY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 21 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold; and, therefore, the threshold for the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Two vendors were identified that fell within the SAT, with total purchases of $1,401,188. A review of the procurement files revealed that the County did not solicit, receive, or retain sealed bids or competitive proposals for these contracts. While the project awards were documented within the Board of County Commissioners' meeting minutes, the formal competitive process, public advertisements, and underlying evaluation metrics were completely absent from the record. Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, 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 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 person. The County's procedure to verify the vendor was not suspended or debarred was not always implemented or effective. A population of four covered transactions totaling $1,816,421 met or exceeded the $25,000 threshold and was paid using the SLFRF allocations. All four covered transactions were selected for testing, and the County failed to provide documentation to support that it performed any of the mandatory verification procedures prior to entering into the agreements or issuing payments to the contractors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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 22 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: . . ." 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 A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. The County was unable to provide documentation to demonstrate they had properly procured and verified that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 23 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting 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): FY2021 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-004. Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population below 250,000 residents that are allocated more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the P&E quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. INDIANA STATE BOARD OF ACCOUNTS 24 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County's current policy and procedures for complying with reporting requirements is to have the Director of Operations prepare the P&E reports with assistance from their Administrative Assistant and then the President of the Board of County Commissioners certifies the P&E reports. The current internal control has been determined to be ineffective since the P&E reports do not agree with the County's financial records. The County submitted four P&E reports during the audit period; however, the errors as identified below were noted on all four reports. Quarterly Report: October 1, 2024 to December 31, 2024 Current period obligations reported 3 projects with errors cumulatively totaling $271,203. Current period expenditures reported 7 projects with errors cumulatively totaling $1,315,969. Cumulative expenditures reported 23 projects with errors cumulatively totaling $2,261,478. Quarterly Report: January 1, 2025 to March 31, 2025 Current period expenditures reported 2 projects with errors cumulatively totaling $29,117. Cumulative expenditures reported 24 projects with errors cumulatively totaling $2,233,551. Quarterly Report: April 1, 2025 to June 30, 2025 Current period expenditures reported 1 project with errors cumulatively totaling $439. Cumulative expenditures reported 24 projects with errors cumulatively totaling $2,212,674. Quarterly Report: July 1, 2025 to September 30, 2025 Current period expenditures reported 3 projects with errors cumulatively totaling $21,693. Cumulative expenditures reported 24 projects with errors cumulatively totaling $2,234,366. The lack of effective internal controls and noncompliance were systemic issues throughout the entire audit period. 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 25 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County's oversight process for filing the P&E reports did not detect errors. The errors were the result of including expenditures from the incorrect time periods. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the County did not report current period obligations, current period expenditures, and cumulative expenditures properly when filing the P&E reports during the audit period. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County strengthen its system of internal controls to provide for a segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-007 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring 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): FY2021 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Other Matters Condition and Context The County expended $1,810,837 in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) during the audit period. Of that amount, $6,014 was passed through to one subrecipient. As a pass-through entity, the County was required to identify the award and applicable requirements and monitor the subrecipients. Procedures to monitor its subrecipients included reviewing the quarterly financial and performance reports as required by the County through the Subrecipient Agreements. No quarterly financial and performance reports were submitted to the County during the audit period. As part of the monitoring the County performed on subrecipients in prior audit periods, they noted subrecipients had been missing reports. Despite having received quarterly reports in prior audit periods, no quarterly reports were submitted for the current audit period. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. 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). . . ." 2 CFR 200.332 states in part: "All pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing the financial and performance reports required by the pass-through entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County's agreements with the subrecipients included quarterly financial and performance reporting requirements, but no procedures were in place to ensure timely and appropriate reporting occurred. The County's oversight process for monitoring subrecipient financial and performance reporting for the audit period did not include adequate follow-up procedures to ensure that required reports were submitted. Subrecipients did not submit the quarterly reports as requested by the County. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The lack of sufficient internal controls resulted in the County receiving none of the required quarterly financial and performance reports from its subrecipients during the year. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County strengthen its system of internal controls to ensure that subrecipients are submitting their financial and performance reports timely and accurately, so that the County can comply with the Subrecipient Monitoring compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.