FINDING 2023-003 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): CY2022 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit quarterly or annually 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 on the type of recipient and the recipient's 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 metropolitan county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. INDIANA STATE BOARD OF ACCOUNTS 18 CLINTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County submitted one P&E report during the audit period, which was obtained from the Treasury's website. Although one employee prepared the P&E report and another reviewed the entries, the system of internal controls was not effective in preventing, detecting, or correcting errors. The data submitted included amounts which should not have been included and amounts which were not supported by the County's records. Errors identified included the following: Total Cumulative Obligations were overstated by $907,630. Total Cumulative Expenditures were overstated by $4,332,524. The lack of effective internal controls and noncompliance were isolated to the P&E report submitted during 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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 Although a system of internal controls over the P&E report was designed by management, which included segregation of duties, it did not ensure that the County provided the Treasury with complete and accurate information related to the SLFRF awards. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 19 CLINTON 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. 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, by reporting erroneous data, increases the likelihood that the public and the Treasury 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 design and implement a proper system of internal controls that would ensure appropriate reviews, approvals and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: U.S. Department of Treasury Assistance Listing Number: 21.027 Federal Award Number: FY 2022 Pass-Through Entity: N/A Compliance Requirements: Reporting Audit Findings: Material Weakness, Modified Opinion 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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, . . ." Condition: The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the Department of 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 City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). As, annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. Cause: A proper system of internal controls over the P&E report was not designed by management of the City, which would include segregation of key functions to ensure the City provided the Treasury with complete and accurate information related to the CSLFRF awards. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Context: The City submitted one P&E report during the audit period; however, a single employee prepared and submitted the P&E report without a review or oversight process in place to prevent, or detect and correct errors. In addition, the P&E report was not properly supported by the City’s records. All but $100,000 of the expenditures were reported under the Eligible Use Category of “Administrative Expenses.” However, the City’s expenditures during the audit period consisted of assistance to business and households, sewer infrastructure, and tourism support, none of which qualified as Administrative Expenses. Furthermore, the City reported that it was electing to take the Revenue Loss Standard Allowance, but the amount reported as Revenue Loss was $0. 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. 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 City. Identification as a repeat finding, if applicable: Yes. The finding appeared in the prior year report as Finding 2022-001. Recommendation: We recommended that management of the City design and implement a proper system of internal controls that would provide a segregation of duties for the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-002 Subject: Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: U.S. Department of Treasury Assistance Listing Number: 21.027 Federal Award Number: FY 2022 Pass-Through Entity: N/A Compliance Requirements: Reporting Audit Findings: Material Weakness, Modified Opinion 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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, . . ." Condition: The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the Department of 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 City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). As, annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. Cause: A proper system of internal controls over the P&E report was not designed by management of the City, which would include segregation of key functions to ensure the City provided the Treasury with complete and accurate information related to the CSLFRF awards. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Context: The City submitted one P&E report during the audit period; however, a single employee prepared and submitted the P&E report without a review or oversight process in place to prevent, or detect and correct errors. In addition, the P&E report was not properly supported by the City’s records. All but $100,000 of the expenditures were reported under the Eligible Use Category of “Administrative Expenses.” However, the City’s expenditures during the audit period consisted of assistance to business and households, sewer infrastructure, and tourism support, none of which qualified as Administrative Expenses. Furthermore, the City reported that it was electing to take the Revenue Loss Standard Allowance, but the amount reported as Revenue Loss was $0. 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. 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 City. Identification as a repeat finding, if applicable: Yes. The finding appeared in the prior year report as Finding 2022-001. Recommendation: We recommended that management of the City design and implement a proper system of internal controls that would provide a segregation of duties for the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Fund - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Fund Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 20-1892-0-1-806 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to quarterly or annually submit 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 metropolitan county with a population below 250,000 residents that received an allocation less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds. As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted one P&E report during the audit period. Although the Deputy County Auditor compiled the information for the report and the County Auditor reviewed and submitted the report, the internal controls were not effective in preventing, or detecting and correcting, errors. As a result, the P&E report contained the following errors: The current period expenditures were overstated by $336,376. The cumulative expenditures were understated by $18,624. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 PERRY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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. . . ." Cause The County's internal controls were not effective to prevent and detect errors on the P&E report prior to submission. The County did not insure that information reported was correct and applicable to the reporting period of the submission. 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 such, the County did not accurately report current period expenditures and total cumulative expenditures properly when filing the P&E report for the period from April 1, 2022 to March 31, 2023. Not properly reporting the information to the Treasury provides the Treasury with an inaccurate picture of the County's activity for the reporting 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County develop policies and procedures to ensure the County accurately reports current period and cumulative expenditures on the P&E report to the Treasury. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 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): FY2022 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-006. Condition and Context Recipients are required to quarterly or annually submit 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. INDIANA STATE BOARD OF ACCOUNTS 17 PUTNAM COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County was classified as a county with a population less than 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds award funds. As such, the County was required to submit an annual P&E report covering the period April 1, 2022 to March 31, 2023, during the audit period. The P&E report due by April 30, 2023, was submitted timely but the report was not accurate and complete. The report did not include any project descriptions, expenditure amounts, or obligation amounts despite the County having made several awards to different entities in support of various activities within the County. Total current period expenditures for the reporting period per the County's ledger were $5,502,689. In addition, there were nine projects, contracts, or awards exceeding $50,000 awarded during the reporting period that were not disclosed in the report. 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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 P&E report was not properly researched and reviewed by the County staff prior to submission. INDIANA STATE BOARD OF ACCOUNTS 18 PUTNAM COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 properly report project descriptions and amounts expended when filing the P&E report during the audit period. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County strengthen its system of internal controls to ensure appropriate reviews, approvals, and oversight are taking place of the work completed by the consultant. We also recommended the development of policies and procedures to ensure the County provides the County 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. INDIANA STATE BOARD OF ACCOUNTS 19
FINDING 2023-004 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): OMB Approval #1505-0271 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 19 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to submit quarterly or annually 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 received an allocation of less than $10 million in State and Local Fiscal Recovery Funds. As such, the P&E report, covering the period from March 3, 2022 to March 31, 2023, was required to be submitted to the Treasury by April 30, 2023. Though the P&E report was prepared by one employee and reviewed by another, the internal control was not effective did not detect and allow corrections of errors prior to submission. The County submitted the P&E report on June 16, 2023, which was 47 days after the due date. Additionally, the report was not mathematically accurate and complete. The key line items of "Total Cumulative Expenditures" and "Current Period Expenditures," as reported on the P&E report, did not agree to the County's ledger. Errors were as follows: The "Total Cumulative Expenditures" line item was understated by $16,071. The "Current Period Expenditures" line item was understated by $21,071. 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). . . ." 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, . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: INDIANA STATE BOARD OF ACCOUNTS 20 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) ". . . 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. . . ." Cause The County did not timely submit the P&E report or verify that the information contained within the report accurately reflected the County's expenditures. The expenditures were understated in the report due to not including all activity for the reporting period. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that P&E reports are submitted timely and are materially accurate and correct. The reports contained the errors identified in the Condition and Context. In addition, not meeting the 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 ensure that the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 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): OMB Approval #1505-0271 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 21 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy The County had not established a purchasing policy that would reflect applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items; procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The County had one vendor that was identified as being less than the simplified acquisition threshold of $150,000 but exceeding the $50,000 micro-purchase threshold. The one vendor was selected for testing. For the one vendor, the County did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. Suspension and Debarment Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF) award funds, 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. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. One covered transaction paid with SLFRF grant funds was identified during the audit period. The covered transaction totaled $66,000 with $46,752 paid in the audit period. The identified transaction was examined to determine if the County verified the suspension and debarment status of the vendor prior to payment. Upon review, the County had not performed procedures to ensure the vendor was not suspended or debarred, or otherwise excluded or disqualified, from participation in federal assistance programs or activities at any time during the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327 . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 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. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." INDIANA STATE BOARD OF ACCOUNTS 23 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are de-barred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 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." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The County participated in a joint project with the City of Rochester (City) in which the City handled the procurement process. However, the County did not request copies of the quotes or bids obtained by the city, nor did the County document a sole source vendor situation. In addition, the County was unable to provide documentation to demonstrate they checked the vendor was not suspended or debarred prior to entering into the contract. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that services obtained provided full and open competition or the basis of the price. In addition, the County cannot ensure the vendors paid were eligible to participate in federal programs. 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 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. INDIANA STATE BOARD OF ACCOUNTS 24 FULTON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the County adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Finally, we recommended that the County strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 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 Pass-Through Entity: Indiana Department of Health 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 2022-005. Condition and Context Recipients are required quarterly or annually to submit 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. The Couty's current policy and procedure for complying with reporting requirements is to have the Director of Operations prepare the P&E reports with assistance from his Administrative Assistant, and then the President of the Board of County Commissioners certifies the 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, 2022 to December 31, 2022 Current period expenditures reported 7 projects with errors totaling $77,234. Cumulative expenditures reported 22 projects with errors totaling $3,955,669. Quarterly Report: January 1, 2023 to March 31, 2023 Current period expenditures reported 7 projects with errors totaling $173,169. Cumulative expenditures reported 25 projects with errors totaling $2,633,217. Quarterly Report: April 1, 2023 to June 30, 2023 Current period expenditures reported 2 projects with errors totaling $0, since expenditures were posted to the incorrect project. Cumulative expenditures reported 24 projects with errors totaling $2,372,744. Quarterly Report: July 1, 2023 to September 30, 2023 Current period expenditures reported 3 projects with errors totaling $13,412. Cumulative expenditures reported 26 projects with errors totaling $2,273,749. 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). . . ." 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 use of funds." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10 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, compliance financial data, in accordance with appropriate accounting standards and principles. . . ." 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 cumulative expenditures and current period 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 2023-003 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): FY 2023 Pass-Through Entity: Indiana State Department of Health Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Procurement The Indiana State Department of Health created the Health Issues and Challenges Grant Program to provide funding to local and statewide service providers and planning organizations through the American Rescue Plan Act. The funds were to be used to prevent or reduce the prevalence of health issues or improve the health and behavioral health of Indiana residents. The City applied for and was awarded the Health Issues and Challenges grant in the amount of $447,112. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Four vendors fell within the small purchase threshold. Two of the four small purchases were selected for testing. For the two vendors tested, totaling $71,889, the City did not obtain price or rate quotes. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the rationale for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF NEW CASTLE 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. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. 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, proper procurement procedures were not adhered to for all vendors. 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 City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish documented procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In additions, we recommended the City adhere to the procurement policies. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF NEW CASTLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 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): FY 21 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Recipients are required to submit quarterly or annually 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. Recipients are required to submit quarterly or annually P&E reports to the 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. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF LAWRENCE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The City was classified as a metropolitan City with a population below 250,000 residents that received an allocation of more than $10 million in State and Local Fiscal Recovery Funds. As such, the City was required to submit four quarterly P&E reports during the audit period. The reports to be submitted during 2023 were for quarters ending December 31, 2022, March 31, 2023, June 30, 2023, and August 31, 2023. The City did not provide audit evidence that the P&E report for the quarter ended December 31, 2022, was prepared and submitted. Additionally, a single employee prepared and submitted the remaining three P&E reports without evidence of oversight and review. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was related to the P&E report for the quarter ended December 31, 2022. 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 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, . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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. . . ." Cause A proper system of internal controls was not designed by management of the City, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The City was not aware the P&E report for the quarter ending December 31, 2022, had not been filed. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF LAWRENCE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper design or implementation of the components of a 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 a result, a quarterly report was not filed with the Treasury. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight of federal reports are taking place. We also recommended that all quarterly reports be filed timely with the awarding agency. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 21
FINDING 2023-005 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): FY 2023 Compliance Requirement: Reporting Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF UPLAND SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to quarterly or annually submit 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 Town was classified as a town with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2022 to March 31, 2023, was required to be submitted to the Treasury by April 30, 2023. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The Town submitted one P&E report during the audit period; however, the report was submitted without a review or oversight process in place to prevent, or detect and correct, errors. 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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 com-piling 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 A proper system of internal controls was not designed by management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF UPLAND SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town strengthen its system of internal controls to provide for segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 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): ARP2021 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annually 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 contract for the appropriate reporting period. The Town was classified as a metropolitan town with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funding. As such, the initial P&E report, covering three calendar quarters from March 3, 2021 to December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent quarterly reports are 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. The Town submitted one P&E report during the audit period timely; however, a single employee prepared and submitted the P&E report without a review or oversight process in place to prevent, or detect and correct, errors. Only one annual report was required to be submitted by the Town. For the report tested, all activity for the reporting period was not included, information submitted was not supported by the Town's records, and the reports were not fairly presented. Errors identified included the following: Annual Report (April 1, 2022 to March 31, 2023) The Current Period Obligation and Total Cumulative Obligations were understated by $33,855. The Current Period and Total Cumulative Expenditures were understated by $33,855. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF WHITESTOWN 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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 A proper system of internal controls over the P&E report was not designed by management of the Town to ensure the Town provided the Treasury with complete and accurate information related to the SLFRF awards. The report that was submitted did not include all transactions from the beginning of 2023, causing a variance with the ledger and what was reported on the P&E report. Effect Without the proper implementation of an effectively designed system of internal controls, the P&E report submitted excluded transactions from the beginning of the reporting period which resulted in all key line items being understated. 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. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF WHITESTOWN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the Town design and implement a proper system of internal controls, which includes a segregation of key function, to ensure that the Town provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 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 Listing Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $73,674,384 and chose to calculate its own revenue loss allowance, which totaled $35,932,557, to use for government services. Some SLFRF program funds expended in 2023 were expended under the revenue loss eligible use category. Additional program funds expended in 2023 were expended under the other eligible use categories. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For funds expended under the revenue loss eligible use category, the above listed procurement requirements do not apply. During the audit period, the County had four vendors with purchases over the $10,000 micropurchase threshold which were expended under an eligible use category other than revenue loss and, as such, were considered small purchase procurements. The County did not provide competitive price quotations for the small purchase procurements for three of the four vendors, which totaled $257,038. Suspension and Debarment Prior to entering into subawards and covered transactions with SLFRF award funds, 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, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During the engagement, an employee of the Board of County Commissioners stated that verification was completed by checking the Excluded Parties List System when covered transactions were entered into by the County to verify that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Six covered transactions, totaling $3,952,203, were paid from SLFRF funds to six different vendors for goods or services that equaled or exceeded $25,000 during the audit period. Three of the six covered transactions were selected for testing. For all three transactions tested, documentation was not provided that the vendor's suspension and debarment status was verified. 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). . . ." 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 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." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 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. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . Cause The County was unable to provide documentation to demonstrate it had properly procured services. In addition, the County was unable to provide documentation to demonstrate it had checked the Excluded Parties List System, per the County's procedures, to ensure vendors were not suspended or debarred prior to entering into covered transactions that exceeded $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the County could have overpaid for the services obtained. Furthermore, without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Board of County Commissioners strengthen the County's system of internal controls to ensure that an adequate number of price or rate quotations are obtained for small purchase procurements. Additionally, we recommended policies and procedures be strengthened to ensure appropriate supporting documentation for federal programs is retained. Lastly, we recommended that the Board of County Commissioners strengthen the County's system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.600, Department of Health and Human Services, Head Start and Covid-19: Head Start ARP Federal Award Identification Number and Year: 05CH011937-03-03, 05HE000989-01-01 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted that 3 out of 3 subaward agreements tested did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted. Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.600, Department of Health and Human Services, Head Start and Covid-19: Head Start ARP Federal Award Identification Number and Year: 05CH011937-03-03, 05HE000989-01-01 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted that 3 out of 3 subaward agreements tested did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted. Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 64.033, Department of Veteran Affairs, VA Supportive Services for Veteran Families Program Federal Award Identification Number and Year: 21-MI-221, 22-MI-221, 20-MI-221-SS, 20-MI-221-LT, 20-MI-221 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;(x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted.Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 64.033, Department of Veteran Affairs, VA Supportive Services for Veteran Families Program Federal Award Identification Number and Year: 21-MI-221, 22-MI-221, 20-MI-221-SS, 20-MI-221-LT, 20-MI-221 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;(x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted.Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 64.033, Department of Veteran Affairs, VA Supportive Services for Veteran Families Program Federal Award Identification Number and Year: 21-MI-221, 22-MI-221, 20-MI-221-SS, 20-MI-221-LT, 20-MI-221 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;(x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted.Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 64.033, Department of Veteran Affairs, VA Supportive Services for Veteran Families Program Federal Award Identification Number and Year: 21-MI-221, 22-MI-221, 20-MI-221-SS, 20-MI-221-LT, 20-MI-221 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;(x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted.Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 64.033, Department of Veteran Affairs, VA Supportive Services for Veteran Families Program Federal Award Identification Number and Year: 21-MI-221, 22-MI-221, 20-MI-221-SS, 20-MI-221-LT, 20-MI-221 Pass-through Entity – N/A Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;(x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted.Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.569, Department of Health and Human Services, Community Services Block Grant Federal Award Identification Number and Year: E20230009-001, E20230816-01/E20242466-10, E20234409-002, E20234742-00 Pass-through Entity – Michigan Department of Human Services Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted. Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.569, Department of Health and Human Services, Community Services Block Grant Federal Award Identification Number and Year: E20230009-001, E20230816-01/E20242466-10, E20234409-002, E20234742-00 Pass-through Entity – Michigan Department of Human Services Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted. Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.569, Department of Health and Human Services, Community Services Block Grant Federal Award Identification Number and Year: E20230009-001, E20230816-01/E20242466-10, E20234409-002, E20234742-00 Pass-through Entity – Michigan Department of Human Services Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted. Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.569, Department of Health and Human Services, Community Services Block Grant Federal Award Identification Number and Year: E20230009-001, E20230816-01/E20242466-10, E20234409-002, E20234742-00 Pass-through Entity – Michigan Department of Human Services Finding Type – Significant deficiency in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR 200.332 all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414) Condition – During our test work, we noted one instance where the subaward was not clearly identified to the subrecipient as a subaward and did not include the information as noted in 2 CFR 200.332. The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, was included in the grant agreement of its subrecipient. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause/Effect – The controls in place did not ensure that the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, were included in the grant agreement of its subrecipient. As a result, required information was omitted. Recommendation – We recommend that management review its procedures and controls to ensure the required information as prescribed by 2 CFR 200.332, Requirements for Pass-through Entities, is included in all subawards to subrecipients. View of Responsible Officials and Corrective Action Plan –The Agency agrees with the finding. When granting funds as a subaward to a pass-through entity, the Agency will update its master templates for subawards to include the required information. In addition, when the sub agreements are routed for signature and reviewed by the Chief Financial Officer, they will be double-checked to ensure compliance with this requirement.
2023-014 Period of Performance Assistance Listing No.: 14.267 Continuum of Care Program Condition: The Organization was unable to demonstrate consistent controls over the period of performance requirement. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs There are no questioned costs. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over. Effect: The Organization could have grant expenditures outside the grant period. Perspective: Thirty-one of forty items selected for testing did not have documentation of the control over compliance with the period of performance requirement. Repeat Finding: This is a repeat finding. See finding 2022-017. Recommendation: In order to prevent future occurences of this deficiency, we recommend that management expand controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Auditee's Response: The Organization agrees with the finding. See attached corrective action plan.
2023-014 Period of Performance Assistance Listing No.: 14.267 Continuum of Care Program Condition: The Organization was unable to demonstrate consistent controls over the period of performance requirement. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs There are no questioned costs. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over. Effect: The Organization could have grant expenditures outside the grant period. Perspective: Thirty-one of forty items selected for testing did not have documentation of the control over compliance with the period of performance requirement. Repeat Finding: This is a repeat finding. See finding 2022-017. Recommendation: In order to prevent future occurences of this deficiency, we recommend that management expand controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Auditee's Response: The Organization agrees with the finding. See attached corrective action plan.
2023-014 Period of Performance Assistance Listing No.: 14.267 Continuum of Care Program Condition: The Organization was unable to demonstrate consistent controls over the period of performance requirement. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs There are no questioned costs. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over. Effect: The Organization could have grant expenditures outside the grant period. Perspective: Thirty-one of forty items selected for testing did not have documentation of the control over compliance with the period of performance requirement. Repeat Finding: This is a repeat finding. See finding 2022-017. Recommendation: In order to prevent future occurences of this deficiency, we recommend that management expand controls to ensure that they are able to demonstrate that all expenses meet their procurement policy. Auditee's Response: The Organization agrees with the finding. See attached corrective action plan.
FINDING 2023-004 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): 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to quarterly or annually submit 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 City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The City submitted one P&E report during the audit period; however, the internal controls in place were not effective and did not prevent, or detect and correct, errors. As a result, errors in reporting were identified. The total cumulative expenditures and current period expenditures were incorrectly reported and were overstated in the amounts of $780,740 and $308,766, respectively, based on the City's financial records. 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, 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 City's management did not have properly designed internal controls in place to review reports prior to submission. Due to the lack of a proper oversight process for filing the P&E report for the period April 1, 2022 to March 31, 2023, the errors note in the Condition and Context were not detected. 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 City did not report total cumulative expenditures and current period expenditures properly when filing the P&E report for the period April 1, 2022 to March 31, 2023. 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 City. 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 City 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 City provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
CONDITION: The City of McKeesport inadvertently charged as eligible expenditures two (2) purchases totaling $144,000 on the third quarter financial report required to be filed with the Department of Treasury that had already been claimed as eligible expenditures in the second quarter financial report. CRITERIA: Section 2 CFR 200.1 of the Uniform Guidance defines a disallowed cost as a charge to a Federal Award that is determined to be unallowable under the Award’s terms, which would include duplicate payments. Section 2 CFR 200.339 of the Uniform Guidance gives the federal agency the authority to disallow costs if the recipient fails to comply with the aforementioned Award terms and conditions. CAUSE: The City inadvertently claimed two vendor payments on both the second and third quarter financial reports required to be submitted to the Department of Treasury which were not detected as part of the oversight process. EFFECT: The City of McKeesport did not comply with the requirements of Sections 2 CFR 200.1 and 200.339 of the Uniform Guidance by inadvertently claiming two vendor payments twice as eligible program costs during calendar year 2023.QUESTIONED COST: Soundthinking, Inc. $99,000 and Butler Township Volunteer Fire Company $45,000. Total - $144,000. RECOMMENDATION: I am recommending that City management reallocate the duplicate payments for other allowable expenditures and update its financial reporting to the Department of Treasury to reflect this reallocation. VIEWS OF RESPONSIBLE OFFICIALS: The City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
FINDING 2023-004 Subject: Drinking Water State Revolving Fund (DWSRF) Cluster - Procurement and Suspension and Debarment Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW23150901 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain a policy that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in evaluation of bids or proposals. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Small Purchases The City expended federal funds to pay 12 separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. A population of 5 vendors had aggregated expenditures for the audit period that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. All 5 vendors were tested; for 2 of the 5 vendors, the City was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. The history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. Suspension and Debarment Prior to entering into subawards and covered transactions with award funds, recipients are required to verify that vendors 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. Due to the agreement with the Indiana Finance Authority (IFA), the City was not required to perform testing over suspension and debarment for a majority of the vendors used; however, several drawdowns from the State Revolving Funds (SRF) program were used to reimburse the City for payments made to specific vendors. The vendors paid directly by the City were not included in the IFA's procedures for checking suspension and debarment, therefore, the City was obligated to meet the requirement. The City did not maintain a set of procedures for checking suspension and debarment status of vendors for expenditures related to the SRF awards. A total of two vendors paid directly by the City exceeded the suspension and debarment threshold of $25,000 and were subject to testing. No documentation to show that suspension and debarment was verified prior to entering into the contract could be provided for either vendor. The lack of internal controls and noncompliance was a systemic issue 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 23 CITY OF LOGANSPORT 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. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 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 the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." Cause The City did not maintain a procurement policy that would demonstrate the appropriate procedures to be followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement or suspension and debarment for expenditures associated with the SRF awards. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services or providing federal funds to an entity that is suspended or debarred. 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 funds to the City. INDIANA STATE BOARD OF ACCOUNTS 25 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award and ensure that vendors paid from federal funds are neither suspended nor debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: Department of Housing and Urban Development Federal Program Name: Continuum of Care Program Assistance Listing Number: 14.267 Federal Award Identification Numbers: MN0087L5K052114, MN0014L5K002114, MN0186L5K112110 Award Periods: 4/1/22-3/31/23; 7/1/22-6/30/23; 8/1/22-7/31/23 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR 200.1 defines period of performance as the total estimated time interval between the start of an initial Federal award and the planned end date. Costs recorded to a grant must not be incurred prior to the start of the period of performance unless authorized by the federal awarding agency. Costs recorded to a grant must also not be incurred after the period of performance. Condition: During our audit testing, we noted costs were charged outside of the period of performance for three different awards. Questioned costs: $5,645 Context: We tested 40 transactions from the beginning of the period of performance, noting 2 exceptions where grants were charged for costs incurred prior to the period of performance. We tested 40 transactions from the ending of the period of performance, noting 3 exceptions where grants were charged after the period of performance. Cause: Invoices were charged based on payment date instead of the incurred date. Effect: Grants were charged for costs outside the period of performance. Management repaid the questioned costs to the grantor during the audit. Repeat finding: Not a repeat finding Recommendation: We recommend the Organization put procedures in place to identify the performance period when charging invoices to grants, particularly during the start and end of the period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Housing and Urban Development Federal Program Name: Continuum of Care Program Assistance Listing Number: 14.267 Federal Award Identification Numbers: MN0087L5K052114, MN0014L5K002114, MN0186L5K112110 Award Periods: 4/1/22-3/31/23; 7/1/22-6/30/23; 8/1/22-7/31/23 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR 200.1 defines period of performance as the total estimated time interval between the start of an initial Federal award and the planned end date. Costs recorded to a grant must not be incurred prior to the start of the period of performance unless authorized by the federal awarding agency. Costs recorded to a grant must also not be incurred after the period of performance. Condition: During our audit testing, we noted costs were charged outside of the period of performance for three different awards. Questioned costs: $5,645 Context: We tested 40 transactions from the beginning of the period of performance, noting 2 exceptions where grants were charged for costs incurred prior to the period of performance. We tested 40 transactions from the ending of the period of performance, noting 3 exceptions where grants were charged after the period of performance. Cause: Invoices were charged based on payment date instead of the incurred date. Effect: Grants were charged for costs outside the period of performance. Management repaid the questioned costs to the grantor during the audit. Repeat finding: Not a repeat finding Recommendation: We recommend the Organization put procedures in place to identify the performance period when charging invoices to grants, particularly during the start and end of the period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Assistance Listing Number, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) Federal Award Identification Number and Year - N/A Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.1 defines ‘‘financial obligation’’ when referencing a recipient’s or subrecipient’s use of funds under a federal award as orders placed for property and services, contracts and subawards made, and similar transactions that require payment. The Treasury Interim Final Rule on “Obligation” further clarifies - This definition aligns with a plain language understanding of ‘‘incur’’ as meaning to become liable or subject to something. Subrecipient monitoring Section under Part 3 of the 2023 Compliance Supplement notes that transfers of federal awards to another component of the same auditee under 2 CFR 200, Subpart F, do not constitute a subrecipient or contractor relationship, and, therefore, funds are not considered obligated at the time they are transferred to a component unit of an auditee. Condition - The County did not have adequate controls in place to ensure funds transferred to a component unit were not reported to the Treasury until the component unit met the criteria for obligated the funds. As a result, the County reported to the Treasury $10,000,000 as obligated based on an agreement between the County and a discreetly presented component unit of the County prior to those funds meeting the definition of obligated. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable, as there were no questioned costs identified Context - During the fiscal year ended September 30, 2023, the County awarded $10,000,000 of CSLFRF to a discreetly presented component unit and reported this as obligated to Treasury in its report for the quarter ended March 31, 2023. For the year ended September 30, 2023, the discreetly presented component unit incurred expenses of approximately $207,000. Cause and Effect - The County considered the executed agreement with its discreetly presented component unit to create an obligation. As such, the County reported the entire award, i.e., $10,000,000, as obligated for the year ended September 30, 2023. The County’s conclusion resulted in the SEFA being initially overstated by approximately $9.8 million, i.e., the difference between the award and the actual expenditures of approximately $207,000. The SEFA for the year ended September 30, 2023 was corrected for this error. Recommendation - We recommend the County correct its Treasury reporting and continue to evaluate the substance and form of its agreements to determine the impact on reporting to the Treasury. Views of Responsible Officials and Planned Corrective Actions - Management has updated the determination of the relationship with the Drains Commission, a separate legal entity, and subsequently adjusted the SEFA to report the current expenditures of the project. The Treasury report will be adjusted in the next reporting period.
Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. The code of federal regulations – 2 CFR 200.313 Equipment requires that: - Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - 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). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification. Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.
Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. The code of federal regulations – 2 CFR 200.313 Equipment requires that: - Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - 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). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification. Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.