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.
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.
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.
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.
2023-005 2023-005 Accuracy over Federal Reporting Requirements (Repeat Finding 2022-004) Program Name: State Opioid Response Federal Assistance Listing No.: 93.788 Federal Agency: Department of Health and Human Services Federal Award Identification: Unknown Pass-Through Entity Number: Unknown Applicable Pass-Through Entity: Ohio Department of Mental Health and Addiction Services and Cuyahoga County, Ohio Type of Finding: Material Weakness Compliance Requirement: Reporting Criteria: Under Section 200.303 of the Uniform Guidance, a non-federal entity must maintain effective internal controls to ensure compliance with federal statutes, regulations, and award terms. Point of Freedom needs to establish and document policies and procedures to meet control objectives outlined in 2 CFR Section 200.1, particularly ensuring accurate recording and accounting of transactions for reliable financial statements and federal reports. Condition: Our federal reports testing revealed inaccuracies in the reports, with supporting documentation failing to corroborate the submitted information. Additionally, management has not provided adequate support to verify the accuracy of these reports. Cause of Condition: The Organization's lack of developed policies and procedures for compliance has led to the identified deficiencies in federal reports. Effect: Inadequate controls in this compliance area pose a significant risk that the Organization may fail to meet federal award reporting requirements. Questioned Cost: Not Quantifiable Context: We selected three months' worth of monthly reports for ADAMHS and one closeout report for OHMAS. Recommendation: We recommend that management develop and implement policies and procedures that address compliance requirements. Additionally, provide comprehensive training to employees on these policies and ensure consistent monitoring to maintain accuracy and timeliness in federal reporting. We also suggest a review process. Views of Responsible Officials: POF's initial and current exposure a few months later to Single Audit compliance requirements have sharpened its focus on the need to purposefully identify and maintain corroborating evidence regarding its timely submission and acceptance by each of the respective funding sources. While POF believes that all these reporting requirements were timely met and accepted by all funding sources, it did not consistently maintain either the report itself, or the related documentation such as copies of the emails sent or the associated read-receipts as evidence of these reports. Effective July 1, POF routinely and consistently accumulated and organized these documents as well as ancillary evidence of their transmission to, receipt by, and acknowledgement of acceptance by the federal agency. POF will be more diligent in its transmissions to funders. POF noted that the 2022 Closeout Report was inexplicably re-submitted instead of the correct 2023 Closeout Report. This is unacceptable, and POF will add a second set of reviews by a second person to improve quality control in this area. As necessary, POF will seek professional education and advice in implementing policies, practices, and procedures in addition to those already described herein.
Criteria or Specific Requirement 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. One of the objectives of internal control over compliance as found in 2 CFR section 200.1 include that transactions should be properly recorded and accounted for in order to permit the preparation of reliable financial statements and federal reports. Condition This deficiency is related to the financial statements finding 2023-01, as listed in Part II above. The City’s financial statements required material audit adjusting journal entries for the financial statements to be presented in accordance with generally accepted accounting principles (GAAP). The financial statements are required to be the product of a financial reporting system that offers reasonable assurance that management is able to produce financial statements in accordance with GAAP. A portion of the adjustments were related to expenditures which were paid by and applied to funding provided by the ARPA Coronavirus State and Local Fiscal Recovery Funds Program. The issue pertained to the financial statement assertion of cutoff; the expenditures were allowable expenditures in accordance with the federal award requirements. Cause The City’s year-end procedures did not identify certain necessary adjustments in a timely manner in order to remove capital outlay expenditures that were incorrectly recorded during the fiscal year ended September 30, 2023. Effect or Potential Effect Adjusting journal entries were proposed as certain accounts were misstated on the unadjusted financial statements, resulting in expenditures being incorrectly included in the unadjusted schedule of expenditures of federal awards. Questioned Costs None. Context During testing of subsequent disbursements and the potential for unrecorded liabilities and during internal control and compliance testing of the major Federal program, it was noted there were two invoices, amounting to a total of $415,821, recorded within accounts payable as capital outlay expenditures which were improperly recorded in the fiscal year ended September 30, 2023. As evidenced by the invoice date and ship date within the invoices, the equipment was not shipped, and the equipment was not received by the City, until after year-end. The expenditures should be recorded in the fiscal year ended September 30, 2024. Repeat Finding This is a variation of a prior year finding from 2022. See summary schedule of prior audit findings. Recommendation Management should ensure year-end closing procedures are completed in a timely manner and are sufficient to assure accounts and financial statements are prepared in accordance with GAAP. Management should assess the risk associated with this condition and identify any additional processes that can be incorporated into their existing controls to improve the deficiency; such as, minimizing the likelihood of year-end material audit adjustments through review of transactions and balances for general propriety and accuracy within one month after year-end. Follow-up and inquiries can be made timely for any transactions for which proper recording is unclear to management, if any. The Grants Administrator should maintain an up-to-date listing of expenditures by award (for all federal, state, and local awards) and should communicate with the Finance Department on a monthly basis to review the listing and determine the proper period in which the expenditures should be recorded and presented.
U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – CFDA 21.027 Criteria: The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Per 2 CFR 200.1, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. Condition: Obligations were overstated by $9,341,064 on the June 30, 2023 Project and Expenditure report. Cause: The City did not have a clear understanding of the reporting requirements for obligations. Effect: The City did not properly report amounts obligated in the June 30, 2023 Project and Expenditure report. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The City should implement procedures to only report obligations on the Project and Expenditure reporting for items that meet the federal criteria for reporting as an obligation. Views of Responsible Official: Management agrees with the finding.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: • Coronavirus State and Local Fiscal Recovery Funds and Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: • 21.027 and 93.959 Federal Award Identification Number: SLFRP0126 Pass-Through Agency: State of Colorado Department of Human Services (CDHS), Signal Behavioral Health Network, and City and Country of Broomfield Department of Health and Human Services Pass-Through Number(s): N/A Award Period: 7/1/2022 – 6/30/2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to § 2 CFR 200.303, Internal Controls, the non-Federal entity 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. According to 2 CFR 200.1, Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition: 93.959: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $23,543. 21.027: The Organization began allocating direct salaries, fringe and indirect expenditures prior to the awards period of performance. The Organization allocated expenditures based on the paid date, rather than the incurred period. Total direct salaries and fringe expenditures allocated to the grant prior to the period of performance was $1,699. Questioned costs: $25,242. Context: We noted the Organization is not in compliance with requirements related to the period of performance. Cause: The Organization allocated expenditures based on the paid date, rather than the incurred period. Effect: Noncompliance with federal regulations. Repeat Finding: Yes: 2022-002 Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on the incurred date, rather than paid date. Views of responsible officials: Management concurs with the audit finding. The previous process for grant salary, fringe, and indirect billings was based on salary paid date and therefore on a cash basis rather than accrual. The policy and process were immediately updated when the issue was identified during the fiscal year 2022 audit to bill based on period incurred rather than paid date, but the issue was identified after the invoices in question were sent. Revised invoices were not sent as total costs incurred during the period of the award, excluding the amounts noted in the finding, were still well over and above the award amount. All questioned costs were allowable but were outside the grant period and there are other eligible expenses during the period of performance which could have been billed to fully draw down on the award.
2023-001 U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Criteria: The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Per 2 CFR 200.1, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. Condition: Obligations were overstated by $1,435,098 on the March 31, 2023 Project and Expenditure report. Cause: The Town did not have a clear understanding of the reporting requirements for obligations. Effect: The Town did not properly report amounts obligated in the March 31, 2023 Project and Expenditure report. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The Town should implement procedures to only report obligations on the Project and Expenditure reporting for items that meet the federal criteria for reporting as an obligation. Views of Responsible Official: Management agrees with the finding.
FINDING 2023-003 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2021-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance for 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 $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. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained from an adequate number of qualified sources for small purchases. The School Corporation did not obtain price or rate quotes for five of the five vendors tested. A total of $82,230 was spent with the five vendors. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 4-13.6-5-2 states: "(a) Except as provided by this chapter and IC 16-33-4-10, if the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall award a contract for the project based on competitive bids. INDIANA STATE BOARD OF ACCOUNTS 21 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) If the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall develop contract documents for a public works contract and keep the contract documents on file in its offices so that they may be inspected by contractors and members of the public. . . ." 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(i) states: "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 A proper system of internal controls was not designed by management of the School Corporation, 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 School Corporation'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 22 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and adhere to procurement procedures for all purchases of goods and services. 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 23
FINDING 2023-003 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2021-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance for 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 $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. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained from an adequate number of qualified sources for small purchases. The School Corporation did not obtain price or rate quotes for five of the five vendors tested. A total of $82,230 was spent with the five vendors. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 4-13.6-5-2 states: "(a) Except as provided by this chapter and IC 16-33-4-10, if the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall award a contract for the project based on competitive bids. INDIANA STATE BOARD OF ACCOUNTS 21 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) If the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall develop contract documents for a public works contract and keep the contract documents on file in its offices so that they may be inspected by contractors and members of the public. . . ." 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(i) states: "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 A proper system of internal controls was not designed by management of the School Corporation, 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 School Corporation'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 22 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and adhere to procurement procedures for all purchases of goods and services. 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 23
FINDING 2023-003 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2021-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance for 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 $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. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained from an adequate number of qualified sources for small purchases. The School Corporation did not obtain price or rate quotes for five of the five vendors tested. A total of $82,230 was spent with the five vendors. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 4-13.6-5-2 states: "(a) Except as provided by this chapter and IC 16-33-4-10, if the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall award a contract for the project based on competitive bids. INDIANA STATE BOARD OF ACCOUNTS 21 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) If the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall develop contract documents for a public works contract and keep the contract documents on file in its offices so that they may be inspected by contractors and members of the public. . . ." 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(i) states: "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 A proper system of internal controls was not designed by management of the School Corporation, 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 School Corporation'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 22 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and adhere to procurement procedures for all purchases of goods and services. 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 23
FINDING 2023-003 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2021-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance for 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 $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. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained from an adequate number of qualified sources for small purchases. The School Corporation did not obtain price or rate quotes for five of the five vendors tested. A total of $82,230 was spent with the five vendors. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 4-13.6-5-2 states: "(a) Except as provided by this chapter and IC 16-33-4-10, if the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall award a contract for the project based on competitive bids. INDIANA STATE BOARD OF ACCOUNTS 21 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) If the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall develop contract documents for a public works contract and keep the contract documents on file in its offices so that they may be inspected by contractors and members of the public. . . ." 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(i) states: "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 A proper system of internal controls was not designed by management of the School Corporation, 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 School Corporation'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 22 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and adhere to procurement procedures for all purchases of goods and services. 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 23
FINDING 2023-003 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2021-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance for 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 $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. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained from an adequate number of qualified sources for small purchases. The School Corporation did not obtain price or rate quotes for five of the five vendors tested. A total of $82,230 was spent with the five vendors. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 4-13.6-5-2 states: "(a) Except as provided by this chapter and IC 16-33-4-10, if the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall award a contract for the project based on competitive bids. INDIANA STATE BOARD OF ACCOUNTS 21 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) If the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall develop contract documents for a public works contract and keep the contract documents on file in its offices so that they may be inspected by contractors and members of the public. . . ." 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(i) states: "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 A proper system of internal controls was not designed by management of the School Corporation, 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 School Corporation'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 22 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and adhere to procurement procedures for all purchases of goods and services. 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 23
FINDING 2023-003 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2021-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance for 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 $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. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained from an adequate number of qualified sources for small purchases. The School Corporation did not obtain price or rate quotes for five of the five vendors tested. A total of $82,230 was spent with the five vendors. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 4-13.6-5-2 states: "(a) Except as provided by this chapter and IC 16-33-4-10, if the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall award a contract for the project based on competitive bids. INDIANA STATE BOARD OF ACCOUNTS 21 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) If the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall develop contract documents for a public works contract and keep the contract documents on file in its offices so that they may be inspected by contractors and members of the public. . . ." 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(i) states: "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 A proper system of internal controls was not designed by management of the School Corporation, 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 School Corporation'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 22 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and adhere to procurement procedures for all purchases of goods and services. 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 23
FINDING 2023-003 Subject: Child Nutrition Cluster - Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment 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 2021-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance for 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 $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. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained from an adequate number of qualified sources for small purchases. The School Corporation did not obtain price or rate quotes for five of the five vendors tested. A total of $82,230 was spent with the five vendors. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria Indiana Code 4-13.6-5-2 states: "(a) Except as provided by this chapter and IC 16-33-4-10, if the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall award a contract for the project based on competitive bids. INDIANA STATE BOARD OF ACCOUNTS 21 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) If the estimated cost of a public works project is at least one hundred fifty thousand dollars ($150,000), the division shall develop contract documents for a public works contract and keep the contract documents on file in its offices so that they may be inspected by contractors and members of the public. . . ." 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(i) states: "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 A proper system of internal controls was not designed by management of the School Corporation, 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 School Corporation'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 22 GREENCASTLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and adhere to procurement procedures for all purchases of goods and services. 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 23
2023-002 U.S. Department of Treasury & Passed through the Commonwealth of Massachusetts Executive Office of Public Safety and Homeland Security COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – AL# 21.027 Criteria: The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Per 2 CFR 200.1, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. Condition: On the March 31, 2023 Project and Expenditure report the Town reported $625,231 of obligations for items that did not meet the definition of an obligation. Cause: The Town did not have a clear understanding of the reporting requirements for obligations. Effect: The Town overstated the amounts obligated in the March 31, 2023 Project and Expenditure report. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The Town should implement procedures to only report obligations on the Project and Expenditure reporting for items that meet the federal criteria for reporting as an obligation. Views of Responsible Official: Management agrees with the finding.
2023-002 U.S. Department of Treasury & Passed through the Commonwealth of Massachusetts Executive Office of Public Safety and Homeland Security COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – AL# 21.027 Criteria: The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Per 2 CFR 200.1, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. Condition: On the March 31, 2023 Project and Expenditure report the Town reported $625,231 of obligations for items that did not meet the definition of an obligation. Cause: The Town did not have a clear understanding of the reporting requirements for obligations. Effect: The Town overstated the amounts obligated in the March 31, 2023 Project and Expenditure report. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The Town should implement procedures to only report obligations on the Project and Expenditure reporting for items that meet the federal criteria for reporting as an obligation. Views of Responsible Official: Management agrees with the finding.
FINDING 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained for 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 $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. The School Corporation did not obtain price or rate quotes for the three vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. For the three vendors tested, totaling $149,061, an adequate number of quotes were not obtained from qualified sources nor was there any 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 federal 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. Four covered transactions that equaled or exceeded $25,000 were identified. All four transactions, totaling $320,121, were selected for testing. For the four vendors, the School Corporation had not performed procedures to ensure the vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. 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(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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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 Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation'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, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded, and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors are not suspended, debarred, or otherwise excluded prior to 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained for 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 $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. The School Corporation did not obtain price or rate quotes for the three vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. For the three vendors tested, totaling $149,061, an adequate number of quotes were not obtained from qualified sources nor was there any 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 federal 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. Four covered transactions that equaled or exceeded $25,000 were identified. All four transactions, totaling $320,121, were selected for testing. For the four vendors, the School Corporation had not performed procedures to ensure the vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. 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(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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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 Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation'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, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded, and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors are not suspended, debarred, or otherwise excluded prior to 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained for 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 $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. The School Corporation did not obtain price or rate quotes for the three vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. For the three vendors tested, totaling $149,061, an adequate number of quotes were not obtained from qualified sources nor was there any 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 federal 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. Four covered transactions that equaled or exceeded $25,000 were identified. All four transactions, totaling $320,121, were selected for testing. For the four vendors, the School Corporation had not performed procedures to ensure the vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. 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(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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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 Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation'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, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded, and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors are not suspended, debarred, or otherwise excluded prior to 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained for 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 $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. The School Corporation did not obtain price or rate quotes for the three vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. For the three vendors tested, totaling $149,061, an adequate number of quotes were not obtained from qualified sources nor was there any 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 federal 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. Four covered transactions that equaled or exceeded $25,000 were identified. All four transactions, totaling $320,121, were selected for testing. For the four vendors, the School Corporation had not performed procedures to ensure the vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. 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(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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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 Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation'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, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded, and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors are not suspended, debarred, or otherwise excluded prior to 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained for 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 $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. The School Corporation did not obtain price or rate quotes for the three vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. For the three vendors tested, totaling $149,061, an adequate number of quotes were not obtained from qualified sources nor was there any 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 federal 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. Four covered transactions that equaled or exceeded $25,000 were identified. All four transactions, totaling $320,121, were selected for testing. For the four vendors, the School Corporation had not performed procedures to ensure the vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. 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(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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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 Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation'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, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded, and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors are not suspended, debarred, or otherwise excluded prior to 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 2023-005 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained for 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 $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. The School Corporation did not obtain price or rate quotes for the three vendors tested that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. For the three vendors tested, totaling $149,061, an adequate number of quotes were not obtained from qualified sources nor was there any 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 federal 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 non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. Four covered transactions that equaled or exceeded $25,000 were identified. All four transactions, totaling $320,121, were selected for testing. For the four vendors, the School Corporation had not performed procedures to ensure the vendors were not suspended or debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities for suspension or debarment. 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(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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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 Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed or implemented, which includes segregation of key functions, by management of the School Corporation to ensure that policies and procedures were in place related to procurement and suspension and debarment. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation'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, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded, and for small purchases an adequate number of quotes were not obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure proper procurement procedures are followed and that contractors are not suspended, debarred, or otherwise excluded prior to 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 2023-005 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 23611-048-PN01, 22611-048-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 23 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). As the grant agreements were between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors exceeded the small purchase threshold during the audit period. Both vendors were selected for testing. In both cases, the Cooperative had determined the curriculum and materials that were purchased, totaling $109,322, were to be provided by a single source provider; however, they did not have a documented rationale or support for the decision. Documentation detailing the history of procurement, which must include the reason for the procurement method used, selection of the vendor, and the basis for the price, was not available for audit for either purchase. Suspension and Debarment Prior to entering into subawards and covered transactions with Special Education Cluster (IDEA) 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 SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Two covered transactions were identified that equaled or exceeded $25,000. Both transactions, totaling $109,322, were selected for testing. For the noted transactions, the Cooperative did not verify the vendor's suspension and debarment status prior to payment due to the Cooperative not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 24 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to fiscal year 2022-2023 and the 23611-048-PN01 and 22611-048-ARP grants. 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(i) states: "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. . . ." 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: INDIANA STATE BOARD OF ACCOUNTS 25 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not implemented by management of the School Corporation, 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 School Corporation'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, 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, adequate documentation was not retained for procurements that fell within the small purchase threshold and vendors to whom payments equal to or in excess of $25,000 were made, were not verified to be not suspended, debarred, or otherwise excluded. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all required documentation is retained and provided for small purchases and to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 23611-048-PN01, 22611-048-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 23 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Ripley-Ohio-Dearborn Special Education Cooperative (Cooperative). As the grant agreements were between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the procurement and suspension and debarment requirements. The Cooperative did not have adequate procedures in place to ensure that the requirements for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors exceeded the small purchase threshold during the audit period. Both vendors were selected for testing. In both cases, the Cooperative had determined the curriculum and materials that were purchased, totaling $109,322, were to be provided by a single source provider; however, they did not have a documented rationale or support for the decision. Documentation detailing the history of procurement, which must include the reason for the procurement method used, selection of the vendor, and the basis for the price, was not available for audit for either purchase. Suspension and Debarment Prior to entering into subawards and covered transactions with Special Education Cluster (IDEA) 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 SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Two covered transactions were identified that equaled or exceeded $25,000. Both transactions, totaling $109,322, were selected for testing. For the noted transactions, the Cooperative did not verify the vendor's suspension and debarment status prior to payment due to the Cooperative not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 24 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to fiscal year 2022-2023 and the 23611-048-PN01 and 22611-048-ARP grants. 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(i) states: "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. . . ." 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: INDIANA STATE BOARD OF ACCOUNTS 25 LAWRENCEBURG COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not implemented by management of the School Corporation, 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 School Corporation'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, 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, adequate documentation was not retained for procurements that fell within the small purchase threshold and vendors to whom payments equal to or in excess of $25,000 were made, were not verified to be not suspended, debarred, or otherwise excluded. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all required documentation is retained and provided for small purchases and to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.