Finding 2025-002 – Material Weakness: Eligibility – Control Finding ALN 93.658 - Title IV-E Foster Care Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Colorado Department of Human Services Criteria Or Specific Requirement: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), establishes requirements for internal control over compliance with Federal program requirements. 2 CFR Section 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance the entity is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. These requirements include the design, implementation, and operation of control activities to ensure compliance with applicable compliance requirements, including eligibility. As eligibility is a key compliance requirement identified in the OMB Compliance Supplement, the County is required to implement a review process and system of internal controls that allows management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, errors or noncompliance in eligibility determinations on a timely basis. Condition: A secondary review of eligibility determinations did not occur in a timely manner during 2025. Cause: Management of the program did not implement an internal control process that functioned in a timely manner. Effect: The possibility exists that an individual was incorrectly determined to be eligible to receive benefits and this error was not identified and corrected in a timely manner. Questioned Costs: Not applicable Context: Our audit of the control processes around eligibility determination for the program determined no timely review over initial determination. Identification As A Repeat Finding: N/A Recommendation: We recommend that the County strengthen the processes within the internal control framework surrounding the review of eligibility determinations for this program. Views Of Responsible Officials And Planned Corrective Action: The County agrees with the finding and has put together a correction action plan for the finding. See corrective action plan included in this report.
Finding 2025-003 Inadequate System of Internal Controls over Eligibility Determination Type of Finding: Material Weakness in Internal Control over Compliance Condition: The Organization uses a database to collect and store documentation related to eligibility determinations for program participants. While this tool was used consistently throughout the year, the audit identified a lack of documented review procedures to verify that eligibility criteria were appropriately assessed and that all required documentation was obtained and retained. There is no established process to review or confirm the completeness and accuracy of eligibility documentation within the database. A new system was implemented in December 2025 which improved the deficiencies identified for the remainder of the year. Criteria: According to Uniform Guidance 2 CFR §200.303(a), the Organization is required to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, per the federal grant award document, the eligibility documentation files must be maintained until three years has elapsed from the las payment under the grant. Cause: The deficiency appears to stem from an underdeveloped system of internal control surrounding the eligibility determination process. Although the Organization adopted a digital solution to facilitate documentation, it did not implement corresponding review or monitoring controls to ensure compliance. In addition, the absence of documented policies or assigned responsibilities contributed to gaps in oversight and follow-through. Possible of Known Effect: In the auditor’s judgment, the Organization did not have a system of internal control in place capable of providing reasonable assurance of compliance with federal eligibility requirements, as required under 2 CFR 200.303 and the applicable program-specific provisions. Questioned Costs: There were no questioned costs identified. Repeat Finding: This finding is a repeat from the prior year. The previous finding was 2024-004. Recommendation: We recommend that the Organization enhance its internal control structure over eligibility determination by implementing a formal review process to verify that all required documentation is obtained, reviewed, and retained in the system. Responsibilities for eligibility review should be clearly assigned, and staff should be trained to ensure that documentation standards are consistently met. Periodic quality checks or file reviews may help reinforce compliance and identify any gaps before claims are submitted or services are rendered. The changes implemented in December 2025 appear to address the issues identified in this finding. Views of Responsible Officials: In September 2025, the Organization began its transition to Pantry Soft, a new CRM to centralize client records, eligibility documentation and service dates. This went live in December 2025. We included mandatory eligibility fields and document upload requirements before service can begin. We developed SOPs to include a standardized eligibility checklist to be completed for all new and returning participants. Staff were trained on Pantry Soft usage, eligibility requirements and document retention stands. The Executive Team performed spot checks on these records but will begin documenting this procedure.
2025-003 Reporting – PR29 CDBG Cash on Hand Quarterly Report Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Housing and Urban Development Program: 14.218 Community Development Block Grants/Entitlement Grants Award Number and Year: B-20-MC-27-003, 2020; B-20-MW-27-003, 2020; B-21-MC-27-0003, 2021; B-22-MC-27-0003, 2022; B-23-MC-27-0003, 2023; B-24-MC-27-0003, 2024; B-25-MC-27-0003, 2025 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The PR29 – CDBG Cash on Hand Quarterly Report is a required report. The basis of accounting described in the directions is the cash basis. The instructions also state that program income received by the grantee from the beginning date of the reporting period through the end date of the reporting period should be reported under line 8 of the report. Condition: In the sample of two quarterly PR29– CDBG Cash on Hand Quarterly Reports tested, errors were noted in both reports resulting from the City reporting program income as received during the reporting period when it was applied to a project, not when it was received by the City. Questioned Costs: None. Context: The PR29 – CDBG Cash on Hand Quarterly Report is not used to claim reimbursement of federal funds. The population consisted of four PR29 – CDBG Cash on Hand Quarterly Reports submitted during the fiscal year. The sample size of two was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City of Minneapolis is not in compliance with the reporting requirements for the PR29 – CDBG Cash on Hand Quarterly Reports. Cause: The PR29 – CDBG Cash on Hand Quarterly Reports were prepared by a new employee. The new preparer was following earlier guidance provided to the previous preparer by HUD. Recommendation: We recommend that the City of Minneapolis implement procedures to complete reports as required by HUD in its instructions for the preparation of the PR29 – CDBG Cash on Hand Quarterly Report. View of Responsible Official: Acknowledge
2025-002 Reporting – Federal Funding Accountability and Transparency Act (FFATA) Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Housing and Urban Development Program: 14.218 Community Development Block Grants/Entitlement Grants 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants Award Number and Year: B-24-MC-27-0003, 2024; B-25-MC-27-0003, 2025 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, that are codified in Title 2 U.S. Code of Federal Regulations, Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) or SAM.gov. Title 2 U.S. Code of Federal Regulations, Appendix A to Part 170, requires reporting a subaward, once issued, by the end of the subsequent month. Condition: The six subawards issued for the 2025 Community Development Block Grant (CDBG) award with obligation action dates between June 3, 2025, and December 18, 2025, were submitted to SAM.gov on March 23, 2026, after the documentation was requested for the audit. For one of the six subawards tested, the amount in SAM.gov did not agree with the applicable grant agreements or other supporting documentation. Additionally, two subawards for the 2024 CDBG award and one subaward for the 2024 CDBG-CV award were not submitted to either the FSRS or to SAM.gov as of the date of our review. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect 6 3 6 1 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect $ 1,699,034 $ 340,536 $ 1,699,034 $ 100,000 Questioned Costs: None. Context: The agreement between the Department of Housing and Urban Development (HUD) and the City of Minneapolis for CDBG for the 2025 award year was not signed until December 2025. The City could not submit FFATA subaward reports before the grant was uploaded into SAM.gov by HUD. All six subawards totaling $1,699,034 issued from the 2025 award year were tested. The subawards not reported for 2024 were not considered tested. Effect: The City of Minneapolis is not in compliance with FFATA reporting requirements. Cause: The submittal of the 2025 subawards was overlooked by City staff until the information related to those subawards was requested for the audit. The City was unable to determine the cause of the subaward amount not matching the grant agreement for the subaward. The subawards not submitted for the 2024 award year were due to these subawards not being communicated properly to the preparer of the subaward reports. The CDBG-CV subaward report was not submitted due to being an amendment to replace an initial award using Emergency Solutions Grant Program funds with CDBG-CV funds. The City did not want to overstate the total HUD funds provided to the subrecipient and were unaware that subaward reports could be edited. Recommendation: We recommend the City of Minneapolis implement procedures to ensure subawards are submitted as required by FFATA. View of Responsible Official: Concur
Program: COVID-19 Community Development Block Grant Cluster Entitlement/Special Purpose Grants Federal Financial Assistance Listing Number: 14.218 Federal Grantor: U.S. Department of Housing and Urban Development Award No. and Year: B23-MC-20-0004 and 2023, B24-MC-20-0004 and 2024, B-25-MC-20-0004 and 2025 Program: COVID-19 Housing Voucher Center Cluster Federal Financial Assistance Listing Number: 14.871, 14.879 Federal Grantor: U.S. Department of Housing and Urban Development Award No. and Year: KS004VO0127 and 2025, EHV KS004 and 2025, KS004DV0001 and 2025 Compliance Requirements: Activities Allowable or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, state that 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 terms and conditions of the Federal award. 2 CFR Section 200.430, Compensation – Personal Services, states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing, we identified the following instances where the timesheet was not reviewed and approved by the employee’s supervisor: • One (1) timesheet charged to the Community Development Block Grant (CDBG) program • Two (2) timesheets charged to the Housing Voucher Center Cluster (HVC) Cause: The City's internal control procedures permitted certain timesheets to be processed without documented supervisory approval. Effect: Because the City's internal control procedures permitted an exception to documented supervisory approval for the timesheets tested, evidence of review and approval was not available. As a result, the operation of the review control could not be verified for those timesheets.Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sampling of forty (40) timesheets were selected for testing for the CDBG program. A nonstatistical sampling or forty (40) timesheets were selected for testing for the HVC program. The condition above was identified during our procedures related to activities allowed or unallowed and allowable costs/cost principles. Repeat Finding from Prior Years: No Recommendation: We recommend that management strengthen controls over payroll processing by ensuring that all timesheets charged to federal programs are reviewed and approved by an independent supervisor prior to payroll processing. Management should also periodically monitor compliance to confirm that approval controls are operating as designed. View of Responsible Officials: See separately issued Corrective Action Plan.
Program: COVID-19 Community Development Block Grant Cluster Entitlement/Special Purpose Grants Federal Financial Assistance Listing Number: 14.218 Federal Grantor: U.S. Department of Housing and Urban Development Award No. and Year: B23-MC-20-0004 and 2023, B24-MC-20-0004 and 2024, B-25-MC-20-0004 and 2025 Compliance Requirements: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, state that 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 terms and conditions of the Federal award. Condition: During our testing of the City’s compliance with reporting requirements, we noted four (4) PR-29 reports, where there was no evidence of the Housing Finance Manager’s review and approval prior to the report being submitted. Cause: The City's control procedures did not require documentation to be retained evidencing management review and approval of PR29 reports prior to submission. Effect: Although management indicated that an informal review occurred prior to submission, the control did not require retention of documentation evidencing the review. Consequently, the City could not demonstrate that supervisory review was performed for the reports tested.Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of four (4) of eight (8) PR-29 reports were selected. The condition above was identified during our testwork of the City’s internal controls over reporting. Repeat Finding from Prior Years: No Recommendation: We recommend the City adhere to their policies and ensure the review and approval of reports are documented. View of Responsible Officials: See separately issued Corrective Action Plan.
2025-001 Equipment and Real Property Management Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Housing and Urban Development Program: 14.218 Community Development Block Grants/Entitlement Grants Award Number and Year: B-25-MC-27-0002, 2025 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.313 (d) states that regardless of whether the equipment is acquired in part or its entirety under the federal award, the recipient or subrecipient must manage equipment (including replacement equipment). Specifically, Title 2 U.S. Code of Federal Regulations § 200.313 (d)(1) states that property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the federal award identification number (FAIN)), the title holder, the acquisition date, the cost of the property, the percentage of the federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Condition: The City of Duluth maintains a listing of equipment acquired with Community Development Block Grants/Entitlement Grant (CDBG) funds; however, the listing does not include all information required by Title 2 U.S. Code of Federal Regulations § 200.313 (d)(1). In the sample of six items tested from the CDBG equipment listing, one of the items tested was no longer in use. A review of the City’s governmental capital asset listing disclosed $142,000 of City park improvements partially funded from the 2016, 2017, and 2018 CDBG projects that were not listed on the CDBG equipment listing. Questioned Costs: Undetermined. Elements of the missing information, such as serial number and location, are not quantifiable as costs. Context: The City of Duluth maintains a listing of equipment; however, the listing does not include the serial number or other identification number, the FAIN, who holds title (City or subrecipient), acquisition date, the percentage of federal award participation, or the disposition data, including the date of disposal and sales price of the property, nor is the City’s CDBG equipment listing complete. The City’s CDBG equipment listing included 19 items totaling $518,355; a sample of six items totaling $178,885 was tested. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City of Duluth is not in compliance with Title 2 U.S. Code of Federal Regulations §§ 200.313 (d) and (d)(1). Cause: Oversight by City staff. Recommendation: We recommend the City of Duluth implement procedures to ensure the equipment and real property listing includes all the required information. The City should also implement procedures to identify asset additions and disposals to ensure that they are properly identified, recorded, maintained, and safeguarded. View of Responsible Official: Concur
2025-002 Reporting – Federal Funding Accountability and Transparency Act (FFATA) Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Housing and Urban Development Program: 14.218 Community Development Block Grants/Entitlement Grants Award Number and Year: B-24-MC-27-0002, 2024 and B-25-MC-27-0002, 2025 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, that are codified in Title 2 U.S. Code of Federal Regulations, Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) or SAM.gov. Title 2 U.S. Code of Federal Regulations, Appendix A to Part 170, requires reporting a subaward, once issued, by the end of the subsequent month. Condition: In the sample of four transactions selected from the 2025 submitted FFATA subawards, two subawards were not submitted by the due date. One of these subaward reports was incorrectly entered in SAM.gov. Additionally, one sub-award issued during 2025 relating to the 2024 award year in the amount of $78,300, was not submitted in SAM.gov. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect 4 1 2 1 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect $ 505,480 $ 78,300 $ 75,480 $ 30,000 Questioned Costs: None. Context: For the subaward not reported, a subrecipient requested that safety improvements be incorporated in a City road project and requested federal funding from the City to pay for those improvements. The City originated an award in the amount of $78,300, provided federal funding to the subrecipient, and made the safety improvements. The subrecipient then reimbursed that funding to the City. For the two reports not reported timely, these were due in late January 2026 but were submitted a month late. For the subaward reported for the incorrect amount, the amount submitted to SAM.gov was $30,000 but the subaward was issued for $25,000 and, therefore, would be exempt from FFATA reporting requirements. The population included nine subawards reported in 2025 totaling $959,480, with the sample of four subawards totaling $505,480. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City of Duluth is not in compliance with FFATA reporting requirements. Cause: The subaward not reported by the City was omitted from FFATA reporting under the mistaken assumption that the reimbursement received from the subrecipient exempted the transaction from compliance. City staff reported they had difficulties in January 2026 with accessing the SAM.gov website which delayed the submission of the subaward reports until February 27, 2026. The incorrect subaward in SAM.gov was the result of an entry error; the submissions to SAM.gov are not reviewed. Recommendation: We recommend the City of Duluth implement procedures to ensure reports are submitted as required by FFATA. View of Responsible Official: Concur
Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Identification of the Federal Programs: As this is an indirect cost allocation finding, all Population Services International (PSI) awards on the SEFA are impacted. See Schedule of Findings and Questioned Costs for table. Criteria or Specific Requirement: In accordance with §200.303 Internal Controls, a 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. Additionally, §200.475(e) Travel costs, states that airfare costs in excess of the basic least expensive unrestricted accommodations class offered by commercial airlines are unallowable except when such accommodations would: (i) require circuitous routing; (ii) require travel during unreasonable hours; (iii) excessively prolong travel; (iv) result in additional costs that would offset the transportation savings; or (v) offer accommodations not reasonably adequate for the traveler's medical needs. The recipient or subrecipient must justify and document these conditions on a case-by-case basis for the use of first-class or business-class airfare to be allowable in such cases. Condition: HealthXP has documented policies and internal controls over allowability of expenditures incurred. However, as identified below, the review and approval process did not operate effectively. During our testing of the indirect cost pool, we identified one unallowable unapproved expense out of 25 samples tested. The exception involved a business-class airfare totaling $5,930, which does not comply with 2 CFR §200.475, Travel costs. Questioned Costs: Known questioned costs associated with the business class airfare totaled $5,930. Context: This is a condition identified per review of HealthXP’s compliance with allowability and allocability provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: HealthXP has documented expenditure policies and procedures regarding the review and approval of expenditures incurred. However, as identified above, the review and approval process for the sample identified above did not operate effectively. Effect: Because this unallowable amount was included in the indirect cost pool allocated across all federal programs, this noncompliance affects all PSI federal awards listed on HealthXP’s Schedule of Expenditures of Federal Awards for the year ended December 31, 2025. Repeat Finding: This is not a repeat finding. Recommendation: We recommend HealthXP adhere to documented policies and procedures regarding review and approval of expenditures. Views of Responsible Officials: HealthXP management agrees with the finding and recommendations set forth within and will provide additional training to staff members to ensure compliance with established policies and procedures. Refer to management’s corrective action plan for additional information.
Internal Control over Compliance and Compliance with the Reporting Compliance Requirement Identification of the Major Federal Program: U.S. Department of Health and Human Services Assistance Listing Number: 93.067 Assistance Listing Name: Global AIDS Grant Award Number under the Uniform Guidance Requirements: See Schedule of Findings and Questioned Costs for table. Criteria or Specific Requirement: In accordance with §200.303(a), Internal Controls, a 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. In accordance with the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Subaward Reporting in SAM.gov. The prime awardee is required to file a FFATA sub-award report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. Condition: We tested HealthXP’s compliance with specific FFATA reporting requirements. Of the six sub-award reports selected for testing, three of the reports with subaward amounts totaling $668,694 were not submitted within the required timeframe. Specifically, the three FFATA reports were filed between 5 and 36 days later than the required filing date. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of HealthXP’s compliance with specified requirements. The samples were selected using a non-statistical sampling method. Cause: Although HealthXP has existing internal control policies and procedures ensuring appropriate filing of sub-award information in SAM.gov, it failed to file the FFATA reports on time. Effect: Failure to report subrecipient information in a timely manner can result in lack of transparency and accountability, which is contrary to the intent of FFATA. Such non-compliance also increases the risk of loss of future awards if compliance with the provisions of Uniform Guidance is not met. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management ensure that all FFATA reports are filed in a timely manner. In addition, management should strengthen the existing internal controls and conduct refresher training to personnel emphasizing timely submission of FFATA reports. Views of Responsible Officials: HealthXP management agrees with the finding and recommendations and will enhance the processes around timely submission of FFATA reports.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2505MN5ADM - 2025 Pass-Through Agency: Minnesota Department of Human Services Award Period: January 1, 2025, through December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The County and the Minnesota Department of Human Services (DHS) have a contract surrounding the federal funds. This contract has several obligations and reporting requirements the County must follow. In the guidance from the State of Minnesota provided the County must maintain controls over eligibility verification requirements. Condition: During our testing, we noted the County had a casefile that had listed citizenship verification as “No” within the system which would indicate that no citizenship had been verified. Note that although citizenship had been verified and a copy of the verification was retained, it was not properly completed within the Maxis system. Questioned costs: None Context: During our testing, it was noted that 1 of 40 tested did not have proper eligibility verification documentation within the Maxis system. Cause: The County’s controls were not sufficient to ensure that verification was properly updated within the Maxis system. Effect: The documentation within the maxis system does not accurately reflect the eligibility verification that has been performed. Repeat Finding: No Recommendation: We recommend the County design controls to ensure an adequate review process is in place to ensure all verification procedures are accurately documented. Views of responsible officials: There is no disagreement with the audit finding.
U.S. Department of Health and Human Services Federal Financial Assistance Listing #93.696 Certified Community Behavioral Health Clinic Expansion Grant Reporting Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing, we identified instances where the annual reports submitted had inaccurate information and incomplete documentation of review and approval prior to submission. Cause: Fraser’s internal controls did not operate as designed, which resulted in inaccurate reports being submitted. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported. Context/Sampling: Both annual reports were reviewed in testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive and documented review over reporting prior to submission. Views of Responsible Officials: Management agrees with this finding.
U.S. Department of Health and Human Services Federal Financial Assistance Listing #93.696 Certified Community Behavioral Health Clinic Expansion Grant Cash Management Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing, we identified an instance where the reimbursement request had inaccurate information and incomplete documentation of review and approval prior to submission of the request. Cause: Fraser’s internal controls did not operate as designed, which resulted in an inaccurate reimbursement request being submitted. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: $761.08 Context/Sampling: A nonstatistical sample of three out of eleven were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive and documented review over reimbursement requests prior to submission. Views of Responsible Officials: Management agrees with this finding.
Assistance Listing Number, Federal Agency, and Program Name - 66.616 - U.S. Environmental Protection Agency - Environmental and Climate Justice Community Change Grants Program Federal Award Identification Number and Year - 2024-00E04015 Pass-through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - The Federal Funding Accountability and Transparency Act (FFATA) as mended by Section 6202 of Public Las 110-252 requires recipients of federal awards to report data using the FFATA Subaward Reporting System (FSRS) Tool (pre-March 8, 2025) or SAM.gov (post-March 8, 2025). 2 CFR 200.303 requires that recipients and subrecipients receiving federal awards establish, document, and maintain effective internal control over the federal awards that provide reasonable assurance that the recipient or subrecipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition - While the System had controls over accumulating the data for inputs into the portal, it did not have an adequate control in place to ensure transactions subject to FFATA reporting were reviewed for completeness and accuracy upon submission. If Questioned Costs Are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - There were no questioned costs identified. Identification of How Questioned Costs Were Computed - There were no questioned costs identified. Context - The System's internal controls over FFATA reporting were not designed to review submissions of FFATA reports. The System did not have a formal review process to verify the completeness and accuracy of data submitted to SAM.gov, nor did it maintain a reconciliation between the accounting system's subaward records and the information entered into SAM.gov. There were no instances of noncompliance or questioned cost identified related to this lack of control. Cause and Effect - The System has not developed or implemented a review structure over the FFATA reporting process at the time of submission. As a result, the System was at increased risk of submitting inaccurate, incomplete, or untimely FFATA reports. Recommendation - The System should implement controls regarding review of prepared FFATA submissions to ensure that all required subaward data is accurately and timely reported to SAM.gov. Views of Responsible Officials and Planned Corrective Actions - Management concurs with this recommendation. MetroHealth will establish and maintain a log documenting FFATA report submission, with internal reviews of disclosures prior to submission.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Cluster Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514 – 2025 Passed Through Entity: Minnesota Department of Human Services Pass Through Number: H55250010 & H58260061 Compliance Requirement: Procurement Award Period: 2025 Type of Finding: Material Weakness in Internal Control Over Compliance; Other Matters Criteria or specific requirement: The County must follow Uniform Guidance Subsection 200.320 Methods of Procurement for all applicable procurements over the County’s micro-purchase threshold. For purchases over the County's micro-purchase threshold of $10,000 but not exceeding the simplified acquisition threshold of $250,000, the County should follow small purchase procedures. 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 County. Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no support showing open competition, cost analysis, or review and approval of selection tested. Questioned costs: None Context: One out of one selection tested had the above noted issues. Cause: The department did not follow the department's procurement policies during the year. Effect: The contracts selected did not go through open competition, cost analysis, or review and approval for the selection tested. Repeat finding: Yes – 2024-004. Recommendation: We recommend the County follow their federal purchasing policy in all their federal programs and retain documentation of that process occurring. As necessary, the County may need to add internal controls that are specific to each program to ensure this properly occurs. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Numbers: 93.778 Federal Award Identification Numbers and Years: 2505MN5ADM - 2025 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55245048 Compliance Requirement: Special Provisions Award Period: 2025 Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The County and the Minnesota Department of Human Services (DHS) have a contract surrounding the federal funds. This contract has several obligations and reporting requirements the County must follow including the requirement the county must work with its collaborative partners to ensure that the LCTS coordinators and staff sampled by the LCTS have completed training approved by the State in the LCTS. Condition: The County was unable to provide a documented formal review process to ensure that LCTS fiscal site contacts were trained on completing cost schedules. Questioned costs: None Context: The County did not provide the documentation of the review over the noted requirement. Cause: The County did not maintain a record of their review process. Also, there has been fewer resources provided in recent years from the Minnesota Department of Human Services to help meet the specific training requirements of LCTS fiscal site contacts completing cost schedule reports. Effect: There is no way to verify the review process was completed and completed timely. Repeat finding: 2024-003 Recommendation: We recommend that the County reviews its polices and controls to ensure there is a formally documented control that ensures all required training of LCTS fiscal site contacts is completed and the documentation of the completions of the training is retained. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance & Supplemental Nutrition Assistance Program Cluster Assistance Listing Numbers: 93.778 & 10.561 Federal Award Identification Numbers and Years: 2505MN5ADM – 2025 & 232MN101S2514 – 2025 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55250010 & H58260061 & H55255048 Compliance Requirement: Allowable Activities & Special Provisions Award Period: 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: The Minnesota Department of Human Services (DHS) requires a listing of employees working on social services programs to be submitted quarterly, known as a random moment study listing (RMS listing). DHS then determines the amount applicable to the applicable income maintenance programs through random moment studies. Each quarter the County’s coordinator reviews their RMS listing to ensure the employees listed are accurate for the people working and being coded in the general ledger. Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: One individual was included in the 1st and 2nd quarters of the Income Maintenance RMS listings sent to the State that was not supposed to be included in the listing. Questioned costs: None Context: Noted errors in two out of four quarterly RMS listings. One individual who was terminated at the end of 2024 was improperly included in the 1st and 2nd quarter RMS listings. Cause: The County's RMS controls and procedures were not robust enough to note that the RMS listings should have excluded the noted individual. Increased turnover and growth of the programs also created an increase in the number changes that were needed to be made to the listings. Effect: Lack of proper controls could affect allocation of fundings due to the staff not being properly listed on the income maintenance RMS listings. Repeat Finding: Yes 2024-002 Recommendation: We recommend that the County review its procedures and control to ensure all RMS listings sent to the State properly exclude those necessary individuals no longer working in the programs. Views of responsible officials: There is no disagreement with the audit finding.
Finding Number: 2025-003 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2025 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Significant Deficiency and Noncompliance – Matching Criteria: The Airport Improvement Program grant agreement requires the recipient to provide the required non-federal matching share for eligible project costs in accordance with the approved grant agreement and applicable federal requirements. Under 2 CFR 200.306, non-federal entities must meet applicable cost sharing or matching requirements. Matching contributions must be verifiable from the recipient’s records, not included as contributions for any other federal award, necessary and reasonable for the accomplishment of project objectives, allowable under the cost principles, and provided for in the approved budget when required. Additionally, 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing, we noted the Airport did not properly ensure that the required local matching contribution was provided and documented in accordance with the grant agreement. Specifically, the grant agreement required a non-federal/local match of five percent. However, the Airport’s accounting records and supporting documentation reflected a local match of ten percent, resulting in a match overstatement of $18,244 in 2025. The Airport did not have a formal review process in place to verify compliance with the required matching percentage before reimbursement requests were submitted. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Cause and Effect: The Airport did not have adequate internal controls to ensure that the required local match was calculated, tracked, reviewed, and documented throughout the grant period. Management relied on project expenditure records and reimbursement activity; however, it did not reconcile total eligible project costs to the required federal and non-federal cost-share percentages. Additionally, responsibilities for monitoring the matching requirement were not clearly assigned, and there was no documented supervisory review of match calculations. As a result, the Airport was not in compliance with the matching requirements of the Airport Improvement Program grant agreement. The federal match was understated, therefore no questioned costs identified. Recommendation: The Airport should establish and implement internal controls over federal grant matching requirements. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.
Finding Number: 2025-004 Federal Program: Airport Improvement Program Federal Award Identification Number and Year: All Airport Improvement Program awards, 2024, 2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Material Weakness and Noncompliance – Allowability Criteria: Under 2 CFR 200.403, costs charged to federal awards must be allowable, meaning they are necessary, reasonable, allocable, adequately documented, and comply with the terms and conditions of the federal award. Additionally, 2 CFR 200.302(b)(7) requires financial management systems to include effective internal controls over accountability of expenditures, including proper review and approval. Per 2 CFR 200.303, the Entity must establish and maintain effective internal control over federal awards to provide reasonable assurance that expenditures are allowable and in compliance. Condition: During testing of expenditures charged to the Airport Improvement Program, we identified that the Airport did not consistently follow its established invoice approval procedures. Specially, two of five checks tested, invoices totaling $1,469,973, lacked documented evidence of CEO and Vice President of Landside, Planning & Infrastructure’s approval prior to payment. The invoices were approved for payment by the Vice President of Finance and Administration. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Cause and Effect: The CEO and Vice President of Landside, Planning & Infrastructure did not sign off on invoices for Airport Improvement Program expenditures as an indication of their approval and allowability. There is an increased risk of expenditures not being allowable if the control process is not properly followed. Recommendation: The Airport should ensure that all purchasing controls are followed when incurring expenditures of federal funds and that purchases are properly approved prior to payment. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.
Finding 2025-001 – Allowable Cost Principles – Payroll Evidence of Review (Significant Deficiency in Internal Control over Compliance) Criteria – In accordance with the Uniform Guidance 2 CFR 200.303 regarding internal controls, the Agency must establish and maintain effective internal control over the federal award that provides reasonable assurance that the Agency is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, per 2 CFR 200.430(i) “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed… These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition/context – Out of the total population of payroll transactions charged to this program, we selected a sample of forty (40) transactions using a random sampling methodology and noted three (3) instances where employee timecards did not have evidence of review or approval by the appropriate director or supervisor of the program in the system. We understand that the payroll process is designed to move forward even if approval is not documented in the system. Effect – Without proper internal controls over timecards, there is an increased likelihood that payroll costs charged to the federal program are incorrect. While timecard review/approval was not documented for 3 samples, based on testing performed, the related payroll was allowable per the grant. Cause – There appears to be inadequate internal controls and/or documentation of controls over review and approval of timecards, to ensure time is accurately reported and ultimately payroll costs are properly charged to the program. Repeat finding – This is not a repeat finding. Recommendation – The Agency should reexamine its processes and controls over payroll. This may also include providing additional training on the importance and relevance of accurate timecards and their impact with compliance requirements. Views of responsible officials – The responsible officials acknowledge the finding, concur with the recommendation and are actively working with the Human Resource Department to implement the program identified within the associated corrective action plan.
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Internal Controls Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP2104 Pass-Through Entity: Allen County Compliance Requirement: Reporting Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 13 MAYSVILLE REGIONAL WATER AND SEWER DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The District was the recipient of a federal program subaward from Allen County, Indiana. Recipients of the subaward are required to submit a Monthly Project Spending Report (MPSR) for each month throughout the life of the grant to Allen County's grant administrator. Information to be reported on the MPSR includes original project funding, funds spent during the month, funds spent to date, planned percentage of project completion as of the end of the reporting month, and actual percentage of project completion. The Office Manager completed and submitted the MPSRs during the audit period as required; however, the District did not design and implement a review process or oversight for the reports prior to submission. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed or implemented by management of the District to ensure that MPSRs were prepared by one individual and reviewed by another individual before submission to Allen County's grant administrator. Effect Without the proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. As such, the District could not ensure that the reports submitted were materially accurate and correct. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the District establish a system of internal controls and develop policies and procedures over the preparation and review of monthly reports to ensure appropriate reviews, approval, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the District provides Allen County with complete and accurate information for all reports. INDIANA STATE BOARD OF ACCOUNTS 14 MAYSVILLE REGIONAL WATER AND SEWER DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 15
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: DA-202407-02980, DA-202407-02967, 00002098 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §578.49(b)(2) and §578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 1 out of 13 clients tested, a comparable unit analysis was not formally reviewed and approved. For 6 out of 13 clients tested, the comparable unit analysis was not reviewed and approved until significantly after the preparation of the form. For 5 out of 13 clients tested, comparable unit analysis was completed after tenant move-in, of which 2 were completed more than 20 days after move-in. Cause: LifeWire’s supervisory staff did not timely review the rent reasonableness documentation. An emphasis on completion of the forms was included in procedures, however management is continuing to enhance procedures related to the timing of preparation and completion in advance of client move-in. Effect or Potential Effect: Lack of timely review of the comparable unit analysis could result in charging of unallowed expenditures to the federal program. Questioned Costs: None. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $947,816. Identification as a Repeat Finding: 2024-001. Recommendation: We recommend that LifeWire enforces the modified procedures to review approve, and retain rental reasonableness documentation, including the comparable unit analysis. Views of Responsible Officials: Management agrees with the finding that documentation was not timely reviewed. Management has modified its policies and procedures to ensure completion and review of rent reasonableness forms in a timely manner.
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2025 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF CROWN POINT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-002. Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) awards 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 expended to equal or exceed $25,000 and all subawards. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. A population of three covered transactions paid from the SLFRF award funds were identified and tested. None of the three covered transactions, totaling $2,436,774, did not include appropriate provisions in the contract, nor did the City require a certification, or check the SAM EPLS to ensure the entity was not suspended or debarred prior to making payment. The lack of internal controls and noncompliance was a systemic issue throughout the audit period and enabled material noncompliance to occur and remain undetected. Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control-Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states in part: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person . . . (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF CROWN POINT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management of the City did not have a formalized suspension and debarment policy to ensure procedures related to suspension and debarment requirements were in place and followed. Effect Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the City develop written policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: Drinking Water State Revolving Fund - Suspension and Debarment Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW24414504 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Prior to entering into subawards and covered transactions with the Drinking Water State Revolving Fund (DWSRF) 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 expended to equal or exceed $25,000 and all subawards. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from the person or entity, or adding a clause or condition to the covered transaction with that person or entity. A population of five covered transactions totaling $2,178,348 paid from the DWSRF award funds were identified and tested. Two of the five covered transactions totaling $85,000 did not include appropriate provisions in the contract, nor did the City require a certification, or check the SAM EPLS to ensure the entity was not suspended or debarred prior to making payment. The lack of internal controls and noncompliance were isolated to the two covered transactions. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF CROWN POINT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align 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 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management of the City did not have a formalized suspension and debarment policy to ensure procedures related to suspension and debarment were in place and followed. Effect Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the City develop written policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 1505-0271 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have policies or procedures in place to address the SLFRF suspension and debarment requirements. During the audit period, the City entered into one covered transaction totaling $860,000, which met the $25,000 threshold for verification. However, the City did not verify the vendor's suspension or debarment status prior to payment because no process existed to ensure contractors were not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. 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 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF HUNTINGTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City was not aware of the suspension and debarment requirements associated with the SLFRF grant. Because the City does not typically receive large federal awards, it did not have formal policies or procedures in place to verify vendors' suspension and debarment status. The City hired a consultant to provide guidance related to a large reconstruction project and to assist with federal grant requirements; however, the City relied on this general guidance and did not establish its own process to ensure compliance with the suspension and debarment requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors who have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City establish and implement a formal system of internal controls to ensure compliance with suspension and debarment requirements. This should include developing and strengthening written policies and procedures to verify, prior to entering into a contract or making payments of $25,000 or more with federal funds, that contractors are not suspended, debarred, or otherwise excluded from participation in federal assistance programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii - Internal Controls Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii Assistance Listings Number: 14.228 Federal Award Number and Year (or Other Identifying Number): SI-22-109 Pass-Through Entity: Indiana Office of Community and Rural Affairs Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The City was awarded Community Development Block Grant funds to support a large infrastructure project. To assist with project oversight and grant compliance, the City contracted with a consultant. The grant agreement between the City and the awarding agency required the City to submit written progress reports on a semi-annual basis. These reports were to provide detailed information regarding the project's progress and performance. Although the consultant prepared and submitted the semi‑annual progress reports on behalf of the City, the City did not have a properly designed system of internal controls to ensure the reports were reviewed and approved by a City employee or official prior to submission. As a result, required reports were submitted without documented City oversight or authorization. The City remained responsible under the grant agreement for ensuring the accuracy, completeness, and timely submission of all required written progress reports. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The City did not design or implement internal controls over the semi-annual progress reports because it relied on the consultant to perform the reporting and compliance functions. City staff believed that hiring the consultant satisfied the City's responsibilities over the reports. INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF HUNTINGTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Because the City did not design or implement internal controls over the semi-annual progress reports, there was increased risk of noncompliance with the reporting requirement, including the potential for inaccurate information to be submitted or reports to be filed untimely. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City design and implement internal controls to ensure all required reports are reviewed and approved by a designated City employee or official prior to submission. These controls should clearly define staff responsibilities, include documented review and approval procedures, and ensure that the City maintains appropriate oversight even when using a consultant to assist with grant administration. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-002 Type of Finding: Significant deficiency in control with Federal program requirements (Procurement and Suspension and Debarment) Repeat Finding: No Criteria: Under 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance further requires that, upon implementing the procurement standards, a nonfederal entity must have written procurement policies and procedures that reflect the procurement requirements in 2 CFR 200.317–.326, including methods of procurement, competition, and required contract provisions. In addition, for procurement transactions, nonfederal entities must ensure that contractors are not suspended or debarred or otherwise excluded from participation in federal assistance programs, typically by checking the System for Award Management (SAM.gov) or obtaining appropriate certifications, when procurement and suspension and debarment are applicable compliance requirements. Condition: For the year ended December 31, 2025, the Leadville Sanitation District did not have written procurement policies and procedures that incorporated the applicable Uniform Guidance procurement standards. In addition, for a sample of transactions subject to procurement tested under major federal programs, the District was unable to provide documentation demonstrating that it had verified vendors were not suspended or debarred when such verification was required. Upon further testing, we were able to verify that none of the vendors were suspended or debarred. Cause: The condition resulted from management not being aware that formalization and documentation of procurement policies and procedures in accordance with the Uniform Guidance and not implementing a consistent process for documenting suspension and debarment checks for covered transactions were required. Potential Effect: The lack of written procurement policies and procedures and the absence of documentation supporting suspension and debarment checks increase the risk that procurement transactions under federal programs may not comply with the Uniform Guidance procurement standards and suspension and debarment requirements. This could result in noncompliance with federal program requirements, potential disallowance of costs, or other remedial actions by federal agencies or pass-through entities. Questioned Costs: None. Recommendation: We recommend that the District (1) develop and formally adopt written procurement policies and procedures that align with the requirements of 2 CFR 200.317–.326, including provisions addressing procurement methods, competition, conflicts of interest, required contract clauses, and documentation requirements; and (2) implement and document procedures to verify and retain evidence that all contractors for covered transactions are not suspended or debarred, such as maintaining SAM.gov search results or equivalent documentation in the procurement files. We also recommend that management provide periodic training to staff involved in the procurement process regarding federal procurement and suspension and debarment requirements. Views of Responsible Officials: Management concurs with the finding and will implement controls to ensure that written procurement policies and procedures are developed and followed and that required suspension and debarment checks are documented for all covered procurement transactions under federal programs
FINDING 2025-001 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): BAN-2 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-002. Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system that would likely be effective in preventing, or detecting and correcting, noncompliance. The purchasing policy provided by the City for review did not include the applicable federal regulations, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. 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." Cause The City did not fully implement the corrective measures stated in the City's corrective action plan prepared in response to this same finding included in the immediately prior audit report. Effect Without a proper system of internal controls in place that operated effectively, the City did not properly follow its corrective action plan and did not update its purchasing policy to reflect the required federal procurement standards. As a result, noncompliance identified in the immediately prior audit remained uncorrected throughout the current audit period. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City update its purchasing policy to incorporate all appropriate federal regulations to ensure compliance with the procurement standards applicable to federal awards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2025 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 FRANKLIN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County had policies and procedures in place to verify that an entity with which it planned to enter into a covered transaction was not suspended, debarred, or otherwise excluded, but their policies and procedures were not effective as not all vendors were verified. A population of four covered transactions totaling $469,280 that equaled or exceeded $25,000 paid from SLFRF funds was identified. For two of the four transactions tested totaling $206,103, the County did not verify the vendors' suspension or debarment status prior to payment. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County had policies and procedures in place to verify that vendors were not suspended or debarred, or otherwise excluded from participating in federal programs, but the reviewer did not ensure that the procedures were followed for all vendors over the $25,000 threshold. INDIANA STATE BOARD OF ACCOUNTS 14 FRANKLIN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper design or implementation of internal controls, the County cannot ensure that vendors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover the funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls to ensure that the current policy in place is properly implemented for all vendors that are paid $25,000 or more, all or in part with federal funds, to ensure they are not suspended, debarred, or otherwise excluded from participating in federal programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2025 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted the P&E report by April 30, 2025, as required; however, the internal control in place over the P&E report was not effective to prevent, or detect and correct, errors. As a result, the following errors were noted: INDIANA STATE BOARD OF ACCOUNTS 15 FRANKLIN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The current period expenditures for one project tested were overstated by $88,800. The current period obligations for seven projects tested were overstated by $190,383. In addition, current period obligations for one project tested were understated by $75,000. The cumulative obligations for two projects tested were overstated by $79,490. In addition, cumulative obligations for three projects tested were understated by $90,665. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause A proper system of internal controls, including policies and procedures, was not designed or implemented by management of the County to prevent and detect errors on the P&E report prior to submission. The County incorrectly reported current period obligations that had been obligated in a prior year, and amounts reported did not always agree to the County's records. The reports submitted were reviewed by a second person, but the reviewer did not identify these errors prior to submission. INDIANA STATE BOARD OF ACCOUNTS 16 FRANKLIN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the County did not accurately report current period obligations, cumulative obligations, or current period expenditures, when filing the P&E report for the period April 1, 2024 to March 31, 2025. Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures that would ensure appropriate reviews, approvals, and oversight of federal reports to ensure errors are detected and corrected. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-002: Lack of sufficient documentation to evidence controls over Suspension and Debarment Identification of the federal program: Program Titles: Youth Homeless Demonstration Program Assistance Listing Number: 14.267 Award Identification: OH0747Y5E022401, OH0748Y5E022100 Federal Agencies: United States Department of Housing and Urban Development Pass-through entities: Cuyahoga County (Office of Homeless Services) Criteria: The Code of Federal Regulations (2 CFR 200.303(a)) requires that each 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.” Condition: Lutheran Metropolitan Ministry was not able to provide documentation to evidence controls surrounding the Suspension and Debarment compliance requirement for the Youth Homeless Demonstration Program. Cause: Lutheran Metropolitan Ministry’s processes and controls established for Suspension and Debarment compliance requirement related to the major programs did not provide for the retention of documentation to evidence such review and approval was completed. Effect: There is an increased risk that the organization may enter into covered transactions with parties that are suspended and debarred. Questioned costs: None Context: Lutheran Metropolitan Ministry was not able to provide documentation to evidence controls surrounding the Suspension and Debarment compliance requirement for two out of two vendors tested under the Youth Homeless Demonstration Program. Recommendation: Lutheran Metropolitan Ministry should evaluate policies and procedures surrounding document retention and ensure that all vendor files include evidence of search and verification that vendors are not suspended and debarred. Views of responsible individuals: Management concurs with and will implement the recommendation. See corrective action plan.
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): ARP Act Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-001. Condition and Context During the audit period, the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) totaling $4,593,666 were expended under the water, sewer, and broadband eligible use categories. The City entered into two contracts with one vendor for two projects under the water, sewer, and broadband eligible use category during the audit period. Total payments made to the vendors during the audit period were $4,593,666, all of which were subject to suspension and debarment provisions. Prior to entering into subawards and covered transactions with the SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. The City's policy related to suspension and debarment requirements included the Executive Secretary of the Engineering and Board of Works (Executive Secretary) verifying the SAMs exclusions. Per inquiry with the City, the Executive Secretary verified the vendor was not suspended or debarred by checking the SAMs exclusions; however, a documented internal control process was not in place to ensure that suspension and debarment was verified according to City policy. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A policy over suspension and debarment requirements was in place. The policy put the responsibility for the SAM search to the department and/or board utilizing federal funds. However, the policy did not state how the City was going to ensure the department and/or board utilizing federal funds implemented the policy. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF EAST CHICAGO 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management strengthen its policy and implement procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): ARP Act Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-002. Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a city with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The City submitted all required P&E reports during the audit period. All four quarterly reports submitted contained errors for current period obligations, current period expenditures, and cumulative expenditures as follows: INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The 2024 Quarter 4 P&E Report current period obligations and expenditures were overstated by $1,121,010 and $379,005, respectively. The 2025 Quarter 1 P&E Report current period obligations and expenditures were each understated by $2,660,694, and the cumulative expenditures were understated by $2,093,083. The 2025 Quarter 2 P&E Report current period obligations and expenditures were each understated by $1,264,473, and the cumulative expenditures were understated by $2,669,107. The 2025 Quarter 3 P&E Report current period obligations and expenditures were each understated by $705,426, and the cumulative expenditures were understated by $3,368,532. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, . . ." Cause All quarterly P&E reports were prepared and submitted without an oversight or review process in place to prevent, or detect and correct, errors prior to submission. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the repayment or loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls that would ensure compliance with the Reporting compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2025-002: Approval of Expenditures not maintained - Significant Deficiency Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance – Allowable Costs (General Disbursements) Federal Agency: Chicago Department of Public Health Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number: 1217907 Award Period: January 1, 2023 to December 31, 2025 Criteria: Under 2 CFR 200.303, the Organization is required to establish, document and maintain effective internal controls over federal awards. Condition and Context: A sample of expenses was selected to test internal control over compliance and compliance with allowable costs/cost principles. Out of the items selected for testing, we noted insufficient documentation of approval on 1 out of 40 expenses selected for testing. Cause: The Organization has fiscal policies and procedures to require written approval, however they were not followed in the instance identified. Effect: The failure to document approvals for expenses could lead to unallowable costs being disbursed on grant awards. Questioned Costs: None identified. Repeat Finding: No. Recommendation: We recommend that management reinforce adherence to the Organization's existing expenditure review and approval and documentation requirements; provide training, as needed; implement monitoring activities or periodic review to evaluate compliance; and consider implementing additional preventive controls (for example, system-based approval requirements) to help prevent payments from being processed without appropriate authorization and supporting documentation. Views of Responsible Officials and Planned Corrective Action: See corrective action plan.
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Internal Controls Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2025 Pass-Through Entity: Allen County Compliance Requirement: Reporting Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF NEW HAVEN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. The City was unable to provide documentation that more than one individual was involved in the preparation and submission of the monthly project spending reports for the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds administered by Allen County (County). Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed or implemented by management of the City to ensure that the monthly project spending reports were prepared by one individual and reviewed by another before submission to the County. Effect Without proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2025 Compliance Requirement: Reporting Audit Findings: Significant Deficiency, Other Matters Condition and Context The City included expenditures on the 2025 Annual Project and Expenditure Report (P&E) that did not occur within the reporting period. As a result, the current period expenditures and cumulative expenditures were both overstated by $35,974 due to including expenditures from April 2025. 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). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary . . . periodic reports providing detailed accounting of the uses of funds, . . ." Cause The internal controls designed and implemented were not operating effectively and did not detect errors in the P&E report. The City inadvertently included an additional month of expenditures in its April 1, 2024 to March 31, 2025 P&E report submission. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF NEW HAVEN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. As such, the City could not ensure that the reports submitted were accurate and correct. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the City provides the U.S. Department of the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): IN0086 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the Town to ensure compliance with requirements related to the grant agreement and the Period of Performance compliance requirement. Recipients must liquidate all obligations incurred by December 31, 2024, under the award no later than December 31, 2026, which is the end of the period of performance. As such, program obligations or costs must be incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. No new obligations or costs may be incurred during the period beginning January 1, 2025, and ending on December 31, 2026. During this two-year period from January 1, 2025 through December 31, 2026, recipients are only permitted to expend funds to satisfy obligations incurred by December 31, 2024. An "obligation" includes an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment. A recipient is also considered to have incurred an obligation by December 31, 2024, with respect to a requirement under federal law or regulation or a provision of the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award terms and conditions to which the recipient becomes subject as a result of receiving or expending SLFRF funds. INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Subsequent to December 31, 2024, the Town entered into three contracts on March 6, March 26, and November 26, 2025, respectively. During the audit period, the Town incurred and paid expenses totaling $1,072,479 related to these agreements. We consider $1,072,479 to be questioned costs. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.5(a) states: "In general. A recipient may only use funds for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable. A recipient may only use funds for the purposes enumerated in § 35.6 (g) through (h) to cover costs incurred during the period beginning December 29, 2022, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2), 602(c)(5)(C), 603(c)(2), and 603(c)(6)(B) of the Social Security Act, as applicable." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. . . ." 31 CFR 35.3 states in part: ". . . Obligation means an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment. . . ." Cause The Town's management failed to properly design and implement an internal control system that would have ensured the Period of Performance compliance requirement was adhered to during the audit period. No new obligations or costs were to be incurred during the period beginning January 1, 2025, and ending on December 31, 2026. The Town entered into three contracts, incurred and paid expenses from the program related to these contracts that were awarded subsequent to December 31, 2024. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Period of Performance compliance requirement could have resulted in the loss of federal funds to the Town. INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs Questioned costs in the amount of $1,072,479 were identified as noted in the Condition and Context. Recommendation We recommended that the Town's management establish an effective system of internal controls and to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 72270 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The Town's Fire Department (Fire Department) was awarded the Health Issues and Challenges Grant through the Indiana Department of Health (IDOH), financed through the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The grant was funded through the American Rescue Plan Act that focused on community paramedicine. Metrics and Evaluation of Funded Activities Report The Fire Department was required to submit program specific metrics and funded activities report to the IDOH through the RedCap software on a monthly basis, due 15 days after month end. The Fire Department Office Manager (Office Manager) was responsible for tracking and compiling the necessary information for the monthly reports. Of the 12 reports tested, two reports were submitted 41 and 12 days late. In addition, the monthly reports were submitted by the Office Manager via the RedCap software without a documented oversight, review, or approval process to ensure timely submission. Annual Report on Program Activities The Fire Department was required to submit an annual report on program activities to the IDOH through an infographic report. The Office Manager was responsible for tracking and compiling the necessary information for the annual report on program activities. The annual report on program activities was submitted by the Office Manager, without a documented oversight, review, or approval process to ensure timely submission. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.329(c)(1) states in part: "The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. . . ." Cause The issues with the monthly Metrics and Evaluation of Funded Activities Reports and the Annual Report on program activities reporting processes stem from the lack of a formal oversight and review procedure to ensure accuracy and timeliness. Without a structured verification process before submission, potential errors and inconsistencies could go undetected, thus increasing the likelihood of inaccurate data reporting. Additionally, the reliance on individual staff members to compile and submit reports without secondary review created inefficiencies and contributed to delays, as evidenced by the late submission of two monthly reports. Effect The lack of oversight and review of the metrics and evaluation of funded activities reports and the annual report on program activities reporting process could result in increased risk of inaccurate data being reported to the IDOH, which could compromise the integrity of the program's performance metrics. The absence of a structed verification process can also lead to inefficiencies, as error or inconsistencies may have required corrections after submission, resulting in inefficient use of time and resources. Additionally, the late submission of two monthly reports indicated a failure to meet reporting deadlines, which could negatively impact compliance with grant requirements and potentially jeopardize future funding opportunities. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the Fire Department implement a formal oversight and review process for all data submissions to ensure accuracy and completeness before they are submitted to the IDOH. This would involve a secondary review by a designated individual or team to verify the data. Additionally, improving workflow coordination through clearly defined roles and responsibilities for each team member would help streamline the process and prevent delays. To further improve timeliness, the Fire Department should implement a tracking and reminder system for report due dates to ensure timely submissions. Providing staff with thorough training on reporting protocols and maintaining detailed documentation will help ensure consistent adherence to procedures. Finally, establishing accountability measures through clear roles, deadlines, and regular audits would enhance the efficiency and effectiveness of the reporting process. These steps will help ensure the Fire Department meets grant requirements, maintains data accuracy, and avoids potential delays or issues in future submissions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-001: Subrecipient Monitoring Significant Deficiency and Other Noncompliance Federal Program: USAID Foreign Assistance for Program Overseas (ALN 98.001) Federal Awarding Agency: United States Agency for International Development Awards: • Direct award: Resilient Coastal Community – 72065622CA00010 • Direct award: Urban Sanitation Activity – 72068724CA00001 • Pass-Through from UC Davis – A23-3500-S001 Criteria: 2 CFR 200.332 lists requirements for pass-through entities to perform as part of the subrecipient monitoring compliance requirement. This includes performing an evaluation of fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring procedures. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. 2 CFR 200.303 states that a receipt or subrecipient of federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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: During fiscal year 2025, iDE passed federal funds to subrecipients under active federal awards that remained operational during a portion of the year prior to the termination of the underlying grant agreements. Although iDE reviewed subrecipient liquidation reports and reimbursement requests supporting expenditures incurred prior to award termination, iDE did not perform or document formal subrecipient risk assessments. Further, because risk assessments were not performed, iDE did not establish or implement monitoring procedures commensurate with assessed risk, such as documented reviews of performance information, follow-up on compliance matters, review of Single Audit reports, or other monitoring activities required by Uniform Guidance. Cause: Employee turnover and terminated programs. Effect: Inadequate procedures and controls for subrecipient monitoring could result in material noncompliance with applicable federal statutes, regulations, or award terms and conditions. Repeat finding: Yes—see Finding 2024-002. Questioned costs: None
Finding Number: 2025-002 Compliance Requirement: Subrecipient Monitoring Program: Government Department /Agency: PhysTEC: Community Models that Transform Physics National Science Foundation (NSF) Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The National Science Foundation’s Proposal & Award Policies & Procedures Guide (PAPPG) (NSF 24-1) Part II Chapter VII B.4. - Subawarding or Transferring Part of an NSF Award (Subaward) states that - “Excluding the purchase of items such as commercially available materials and supplies, equipment, or general support services allowable under the award, no part of an NSF award may be subawarded or transferred to another organization without prior NSF authorization. The intent to enter into such arrangements should be disclosed in the proposal. If it becomes necessary to subaward or transfer part of an NSF award after an award has been made, the recipient shall submit, at a minimum: a. a clear description of the work to be performed by each subrecipient; b. a separate budget and budget justification for each subaward; and c. If funding is requested to support a postdoctoral researcher, and the original proposal did not include a mentoring plan, then the request must include the requisite mentoring plan as described in Chapter II.C.2.j. The plan must be uploaded under “Mentoring Plan” in the Supplementary Documentation section of Research.gov. The request must be signed and submitted by the Authorized Organizational Representative (AOR) via use of NSF’s electronic systems, and NSF authorization will be indicated by an amendment to the award signed by the Grants and Agreements Officer. The NSF award terms and conditions will identify which articles flow-down to subrecipients. Condition: During testing of subrecipient activity, we noted that APS issued 3 new subawards under the NSF grant after the original award date without obtaining prior NSF authorization. APS indicated it believed explicit NSF approval was not required and that subaward information was communicated through its annual reports to NSF. Questioned Costs: Not Determinable. Context: During testing of APS’ subrecipient activity, 3 new subawards were issued after the award date without evidence that prior NSF authorization was requested by the AOR and approved through an award amendment by the Grants and Agreements Officer. Effect: APS was not in compliance with NSF award requirements, which increases the risk of questioned costs, noncompliance with award terms, and potential administrative action by NSF. Cause: APS’ internal controls did not ensure personnel identified and complied with NSF prior-approval requirements for post-award subawards, and APS personnel misunderstood annual reporting to be sufficient in place of specific prior authorization. Repeat Finding: No. Recommendation: APS should enhance its grant compliance review procedures to require documented assessment of prior-approval requirements before executing post-award subawards and obtain and retain written NSF authorization, when required, before subawards are issued. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.
Finding Number: 2025-001 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Programs: Government Department /Agency: Travel: DFD Meeting Travel Grant Program National Science Foundation (NSF) Assistance Listing Number: 47.041 Award Number: CBET-2434521 Award years: 7/01/2024 – 2/28/2026 PhysTEC: Community Models that Transform Physics Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 National Physics REU Leadership Group Workshop and Community-Building Assistance Listing Number: 47.049 Award Number: PHY-2011908 Award years: 06/01/2020 – 12/31/2025 Inclusion Across the Nation of Communities of Learners of Underrepresented Discoverers in Engineering and Science Assistance Listing Number: 47.076 Award Number: HRD-1834540 Award years: 09/01/2018 – 05/02/2025 Changing Physics and Astronomy Education Culture: A Reflective Practice Model of Faculty Development to Support Diversity, Equity, Inclusion, and Excellence Assistance Listing Number: 47.076 Award Number: DUE-2141678 Award years: 05/01/2022 – 04/30/2027 Collaborative Research: Mobilizing Physics Teachers to Promote Inclusive and Communal Classroom Cultures through Everyday Actions Assistance Listing Number: 47.076 Award Number: DRL-2300608 Award years: 09/15/2023 – 04/25/2025 Inclusive Graduate Programs: An AGEP Pilot in Physics Assistance Listing Number: 47.076 Award Number: 60066090 APS Award years: 08/15/2023 – 05/02/2025 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. g) Be adequately documented.” Condition: During our test work over payroll transactions for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that 3 of 40 sampled transactions were duplicate charges to the program. In response, APS reviewed the full payroll population and determined that the total amount of duplicated payroll charges was $29,181. APS subsequently corrected the Schedule of Expenditures of Federal Awards (SEFA) to remove all duplicated costs. Questioned Costs: $29,181. Context: This is a condition identified per review of APS’ compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $48,928. Effect: Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause: APS did not maintain effective internal controls during one month of the year to ensure that only allowable costs were charged to the program, due to internal controls not operating as intended following a system enhancement to the grants management timekeeping system. Repeat Finding: No. Recommendation: BDO recommends that management strengthen controls over payroll processing and grant expenditure review to ensure salary costs charged to federal awards are accurate, supported, and recorded only once. Specifically, management should implement and document a review control to identify duplicate payroll postings before and after upload to the general ledger and grant ledger, reconcile payroll charges to approved payroll records on a timely basis, and investigate and resolve any exceptions noted. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.
Program: 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Significant Deficiency: Lack of documented equipment usage supporting FEMA project worksheet costs Compliance Requirement: Allowable Costs/Cost Principles Condition/Criteria: The recipient and subrecipient must establish, document, and maintain effective internal control over Federal awards to provide reasonable assurance that costs charged to the award are allowable, allocable, and adequately supported, in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR §200.303(a)). The Cooperative did not retain documentation supporting the actual usage of certain equipment items—including ATVs, skid steers, and trailers— reported on FEMA project worksheets. Documentation such as equipment usage logs, assignment records, or other support demonstrating when and how the equipment was used for eligible work was not consistently maintained. Cause: The Cooperative did not have equipment usage tied to specific employees or trucks; therefore, timesheets did not reflect equipment usage in terms of hours. Effect: As a result, the Cooperative was unable to fully demonstrate the basis for equipment usage reported on the project worksheets. Questioned costs by asset include ATVs - $7,599; Loader/Skid Steer - $32,916; Equipment Trailers - $11,267; and Rear Dump Trailers - $10,287, for a total of $62,069. Recommendation: The Cooperative should implement procedures requiring equipment usage to be documented (e.g., equipment logs or assignment records) and retained for all FEMA‑related projects. Additionally, management should implement a secondary review to verify that documented equipment usage supports the amounts reported on project worksheets prior to submission.
Program: 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Significant Deficiency: Non‑storm‑related costs included on FEMA project worksheet Compliance Requirement: Allowable Costs/Cost Principles Condition/Criteria: The recipient and subrecipient must establish, document, and maintain effective internal control over Federal awards to provide reasonable assurance that costs charged to the award are allowable, allocable, and related to the declared disaster, in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR §200.303(a)) Costs included on a FEMA project worksheet were identified that the Cooperative had intended to exclude because the work was not related to the declared storm event. In addition, certain costs from a separate invoice that was not related to the storm were inadvertently included on the project worksheet. These costs were included in the FEMA submission as prepared or finalized with the assistance of the FEMA representative. Cause: The Cooperative did not perform a review of the final project worksheet amounts to ensure that all costs included were storm‑related and agreed to the Cooperative’s internally determined eligible costs prior to submission or acceptance. Effect: As a result, non‑storm‑related costs were included on the FEMA project worksheet. The errors noted did not result in material known or likely questioned costs required to be reported. Recommendation: The Cooperative should implement procedures requiring a documented review and reconciliation of final FEMA project worksheets to underlying invoices and management’s determination of storm‑related eligible costs prior to submission or acceptance. This review should confirm that all costs included relate to the declared event and that any intended exclusions are reflected in the final submission. Bolinger,
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2025 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Reporting Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF GREENSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to quarterly or annually submit Project and Expenditure reports (P&E) to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and obligations for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). This would classify them as a Tier 5 Recipient. As such, the P&E report covering April 1, 2024 to March 31, 2025, was required to be submitted to the Treasury by April 30, 2025. The City submitted the annual P&E report prior to the due date. However, there were no documented internal controls in place that would likely be effective in preventing, or detecting and correcting, noncompliance related to the reporting requirements. The report was prepared and submitted by one employee without an oversight, review, or approval process to ensure accuracy and completeness. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed and implemented by management of the City to ensure that P&E reports were prepared by one individual and reviewed by another individual before submission to the Treasury. Effect Without the proper implementation of an effectively designed system of internal controls, material errors could occur and remain undetected. Material errors with the SLFRF reports could result in the loss of federal funds to the City. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF GREENSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: Assistance to Firefighters Grant - Procurement and Suspension and Debarment Federal Agency: Department of Homeland Security Federal Program: Assistance to Firefighters Grant Assistance Listings Number: 97.044 Federal Award Number and Year (or Other Identifying Number): EMW-2023-FG-06299 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations require recipients of federal awards to maintain documented procedures for procurement under a federal award. These procedures must comply with State, local, and tribal laws, along with applicable provisions under 2 CFR 200.317 through 2 CFR 200.327. These requirements include the avoiding of acquisition of unnecessary or duplicative items, a clear and accurate description of technical requirements for the items or services to be procured, the requirements for solicitations to identify any and all requirements which offerors must fill and other factors to be used in evaluating bids or proposals, and a policy prohibiting the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals. The City did not present a procurement policy containing these required provisions for the audit. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, when the value of the procurement for property or service exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold. Therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Federal regulations require a firm-fixed-price contract to be awarded in writing to the lowest responsible and responsive bidder. The City solicited bids for Air-Paks funded through the Assistance to Firefighters Grant. After awarding the bid, the City did not enter into a formal written contract with the vendor. Suspension and Debarment Prior to entering into covered transactions with federal award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have policies or procedures in place to verify that vendors were not suspended or debarred before entering into covered transactions. During the audit period, the City entered into one covered transaction for Air-Paks, utilizing $837,350 of federal award monies, which met the $25,000 threshold for verification. However, the City did not verify the vendor's suspension or debarment status prior to payment because no process existed to ensure contractors were not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 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. . . . INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (ii) If sealed bids are used, the following requirements apply: . . . (D) A firm-fixed-price contract will be made in writing to the lowest responsive and responsible bidder. When specified in bidding documents, factors such as discounts, transportation cost, and life-cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not implement effective internal controls to safeguard their procurement policy. The City's procurement policy was destroyed in a storm, and no backup copies were available. Also, the City was not aware that a formal written contract was needed for procurements exceeding the SAT threshold or the Procurement and Suspension and Debarment compliance requirement when a covered transaction is expected to equal or exceed $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, the City is at risk of noncompliance with the Procurement and Suspension and Debarment compliance requirement, including the potential for a loss of federal funds awarded to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City design and implement a proper system of internal controls, including policies and procedures, to ensure the City complies with the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: Assistance to Firefighters Grant - Equipment and Real Property Management Federal Agency: Department of Homeland Security Federal Program: Assistance to Firefighters Grant Assistance Listings Number: 97.044 Federal Award Number and Year (or Other Identifying Number): EMW-2023-FG-06299 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The City was awarded the Assistance to Firefighters Grant to fund Air-Paks for the City's fire department and other participating fire departments. The Air-Paks were not included in the City's detailed capital asset listing. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d)(1) states: "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 FAIN), who holds title, the acquisition date, and 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." Cause The City did not design or implement internal controls to ensure the Air-Paks were included in the City's detailed capital asset listing. The City's fire department maintained an inventory of the Air-Paks; however, the Air-Paks were not included in the City's detailed capital asset listing. INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the City is at risk of noncompliance with the Equipment and Real Property Management compliance requirement, including the potential for incomplete and inaccurate property records. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City design and implement a proper system of internal controls, including policies and procedures, to ensure that assets being purchased with federal funds are added to the City's detailed capital asset listing and all required information is maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-004 Subject: Assistance to Firefighters Grant - Internal Controls Federal Agency: Department of Homeland Security Federal Program: Assistance to Firefighters Grant Assistance Listings Number: 97.044 Federal Award Number and Year (or Other Identifying Number): EMW-2023-FG-06299 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The grant agreement between the City and the awarding agency required the City to submit a Federal Financial Report (SF-425) and a Performance Progress Report (PPR) on a semiannual basis. The submitted reports encompassing the audit period were tested. The reports were prepared and submitted by the grant administrator; however, there was no segregation of duties documented to ensure the reports were complete, accurate, and timely submitted. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The City did not design or implement internal controls over the reports because the City relied on the grant administrator for complying with the Reporting requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the City is at risk of noncompliance with the Reporting compliance requirement, including the potential for incomplete, inaccurate, or untimely reporting. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City design and implement a proper system of internal controls, including policies and procedures, to ensure that the City provides the awarding agency with complete, accurate, and timely reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF AUBURN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. Covered transactions include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have any policies or procedures in place related to the SLFRF suspension and debarment requirements to determine whether each required vendor was suspended or debarred. Upon inquiry of the City, it was determined that there were two covered transactions paid with SLFRF during the audit. One was a contract that started in 2024 and had payments in both 2024 and 2025 totaling $2,267,000, and one that started in 2025 for $887,844. In testing the two transactions, it was noted that the City did not verify the suspension or debarment status for the vendor that started in 2025 prior to payment. 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 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF AUBURN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The City was unable to provide documentation for one covered transaction that it properly verified a contractor was neither suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs. Recommendation We recommended that management of the City design and implement a system of internal controls to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Federal Transit Cluster – Internal Controls Federal Agency: Department of Transportation Federal Program: Federal Transit Cluster Assistance Listing Number: 20.507 Federal Award Numbers and Years (or Other Identifying Numbers): IN-2025-019 - IN-90-X850 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency, Other Matters Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award 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 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: An effective internal control system was not in place at the BPTC to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. BPTC did not have adequate documentation to support expenditures. Cause: BPTC’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed BPTC at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $50,000 Context: During testing, we noted for one voucher, in a sample of sixty vouchers, BPTC paid $100,000 for an option to purchase land for a capital related project. BPTC incorrectly charged a portion of the land purchase option to an operating grant and was reimbursed $50,000 for the expense. The option is a capital expense that would not qualify for reimbursement under the operating grant. Identification as a repeat finding, if applicable: No. Recommendation: We recommend BPTC review all purchases to ensure only operating related purchases are charged to the operating grants and return the funds incorrectly reimbursed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2025-001 – Reporting Significant Deficiency Condition: During our testing of the reporting compliance requirement, we noted that the Executive Director prepares the profit and loss detail used to complete the Federal Financial Report (SF-425), completes the SF-425, and submits the report to the Economic Development Administration. An independent review of the completed SF-425 is not performed prior to submission. Questioned Costs: None. Criteria: Based on the terms and conditions of the Economic Adjustment Assistance (EDA) grant award, Federal Financial Reports (SF-425) are required to be submitted to the Economic Development Administration (EDA) on a semi-annual basis. In accordance with 2 CFR § 200.303, the entity is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance the award is managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Such controls should include an independent review of required federal reports prior to submission. Cause: The entity has not established a formal review process over the preparation and submission of the SF-425. As a result, responsibility for preparing, reviewing, and submitting the report is concentrated with one individual. Effect: Without an independent review of the SF-425 prior to submission, errors or omissions may not be identified before the report is submitted to the federal awarding agency. This increases the risk that inaccurate or incomplete financial information could be reported. Recommendation: We recommend that management strengthen internal controls over the preparation and submission of the SF-425 by assigning preparation of the report to the Program and Finance Manager. The Executive Director should independently review the completed SF-425 for accuracy, completeness, and compliance with grant reporting requirements prior to submission. The review should be documented to provide evidence that the control was performed. Views of Responsible Officials: Management agrees with the finding. Please refer to the Corrective Action Plan for management’s views and planned corrective action.