FINDING 2024-002 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): CY 2024 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 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 (e.g., 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. One covered transaction paid from SLFRF award funds during the audit period was identified and tested. The covered transaction, totaling $1,799,643, did not include the 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. 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 non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 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 Without the proper implementation of an effectively designed system of internal controls, the City could not ensure the vendors paid with federal funds were eligible to participate in federal programs. 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.
Department of Treasury Federal Financial Assistance Listing 21.033, Award 22ERP060843 Community Development Financial Institutions Equitable Recovery Program (CDFI ERP) Suspension & Debarment 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: In our testing of suspension and debarment, it was identified that there was no observable documentation to directly indicate that a search for suspension and debarment was performed for loans disbursed prior to entering into loan agreements. Cause: Meda does not have a formal process to search for suspension and debarment of entities prior to entering into a loan agreement. Effect: Failure to document the search for suspension and debarment before entering into the loan agreement could result in possibly noncompliance. Questioned Costs: None reported. Context: Two loans out of two tested accounted for $1,177,250 of the total expenses $2,094,298 charged to the federal award. Repeat Finding from Prior Years: Yes, 2023-002 Recommendation: We recommend that management add a formal process to search for suspension and department before entering into loan agreements. Views of Responsible Officials: Management agrees with the finding.
2024-002 Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Programs: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 242MN101S2514, 242MN101S2520, 242MN127Q7503; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: For two of the four covered transactions tested, the County did not maintain documentation of verification that the vendors were not suspended or debarred prior to entering into the covered transactions. Questioned Costs: None. Context: The County entered into a total of 16 covered transactions during the year using State Administrative Matching Grants for the Supplemental Nutrition Assistance Program funds. The vendors tested that did not have documentation of verification prior to entering the transaction were not listed as suspended or debarred on SAM.gov at the time of the audit. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County did not anticipate paying for these expenditures using federal funds and therefore did not perform or document the search for suspension and debarment. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not debarred, suspended or otherwise excluded from conducting business with the County; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur
2024-002 Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Programs: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 242MN101S2514, 242MN101S2520, 242MN127Q7503; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: For two of the four covered transactions tested, the County did not maintain documentation of verification that the vendors were not suspended or debarred prior to entering into the covered transactions. Questioned Costs: None. Context: The County entered into a total of 16 covered transactions during the year using State Administrative Matching Grants for the Supplemental Nutrition Assistance Program funds. The vendors tested that did not have documentation of verification prior to entering the transaction were not listed as suspended or debarred on SAM.gov at the time of the audit. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County did not anticipate paying for these expenditures using federal funds and therefore did not perform or document the search for suspension and debarment. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not debarred, suspended or otherwise excluded from conducting business with the County; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur
2024-002 Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Programs: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 242MN101S2514, 242MN101S2520, 242MN127Q7503; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: For two of the four covered transactions tested, the County did not maintain documentation of verification that the vendors were not suspended or debarred prior to entering into the covered transactions. Questioned Costs: None. Context: The County entered into a total of 16 covered transactions during the year using State Administrative Matching Grants for the Supplemental Nutrition Assistance Program funds. The vendors tested that did not have documentation of verification prior to entering the transaction were not listed as suspended or debarred on SAM.gov at the time of the audit. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County did not anticipate paying for these expenditures using federal funds and therefore did not perform or document the search for suspension and debarment. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not debarred, suspended or otherwise excluded from conducting business with the County; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur
2024-003 Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Programs: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP0278; 2021 Pass-Through Agency: N/A - Direct Criteria: 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: For two of the four covered transactions tested, the County did not maintain documentation of verification that the vendors were not suspended or debarred prior to entering into the covered transactions. Questioned Costs: None. Context: The County entered into a total of 36 covered transactions during the year using COVID-19 – Coronavirus State and Local Fiscal Recovery Funds. The vendors tested that did not have documentation of verification prior to entering the transaction were not listed as suspended or debarred on SAM.gov at the time of the audit. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County informed us that, for one covered transaction, the County did not retain results of the suspension and debarment search, and, for one covered transaction, the County did not initially anticipate using federal funds to pay for the transaction. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not debarred, suspended or otherwise excluded from conducting business with the County; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur
2024-004 Eligibility Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.558 Temporary Assistance for Needy Families Award Number and Year: 2401MNTANF; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: 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. Title 42 United States Code § 602(a)(1)(B)(iii) requires each state to create a plan for the delivery of benefits and the determination of eligibility. The Minnesota Department of Human Services’ State Plan for Temporary Assistance for Needy Families (TANF) and Minn. Stat. § 142G.10 establish the general eligibility requirements for TANF benefits which require the county to document, verify, and recertify specific information, including information relating to assets and income. Condition: The Minnesota Department of Human Services (DHS) maintains the computer system, MAXIS, which is used by Anoka County to support the eligibility determination process. In the case files reviewed for eligibility, not all documentation was available, updated, or input correctly to support participant eligibility. The following exceptions were noted in the sample of 40 MAXIS case files tested: • Two case files had assets in MAXIS that were not updated to agree with supporting documentation in the case file. • One case file did not have the support for the income listed in MAXIS. • One case file did not have the support for the assets listed in MAXIS. • One case file transferred from another agency did not include the supporting documentation to verify compliance. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to participants in this program. Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Anoka County performs the “intake function” needed for this program, while the state maintains the MAXIS system, which supports the eligibility determination process. Participants receive benefit payments from the state. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The lack of updated information in MAXIS to document verification of key eligibility-determining factors increases the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel entering case data into MAXIS did not ensure all required information was retained in the case file as it was entered into MAXIS. The County did not retain specific information for one participant that moved into and out of the County. Recommendation: We recommend Anoka County implement additional procedures to provide reasonable assurance that the information is properly input or updated in MAXIS and retained in the supporting case files. View of Responsible Official: Concur
2024-002 Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP3546; 2021 Pass-Through Agency: N/A - Direct Criteria: 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The County’s written procurement policy, however, requires both checking SAM.gov exclusions and obtaining a certification from the contractor prior to entering into a covered transaction. Condition: For three covered transactions tested, the County did not follow its written procurement policy to perform verification for suspended or debarred vendors by checking SAM.gov prior to entering into the covered transactions. Also, certifications were not obtained from contractors for two of the three covered transactions tested. Questioned Costs: None. Context: The County entered into a total of 11 covered transactions for the Coronavirus State and Local Fiscal Recovery Funds program during 2024. At the time of the audit, the County provided a signed certification for one of the three transactions tested and provided support that the vendors tested were not recently listed as suspended or debarred on SAM.gov. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: At the time of entering into the covered transactions, the County was not aware which transactions would be used as grant expenditures, and the County did not perform a SAM.gov search. Additionally, the County indicated two of the transactions tested were professional service agreements, and the County was not required to follow a formal bidding process; therefore, certifications were not obtained. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not debarred, suspended, or otherwise excluded from conducting business with the County; the County should complete this documentation prior to entering into a covered transaction. View of Responsible Official: Acknowledge
Finding 2024-001 Federal Funding Accountability and Transparency Act (FFATA) Reporting Identification of the federal program: Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282) (Transparency Act) that are codified in 2 CFR Part 170, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency no later than the end of the month following the month in which the obligation was made.” 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) per submission instructions posted at http://www.fsrs.gov. Condition: During our testing of FFATA Report, it was identified that the report was not submitted by Fairview management within the time frame designated in 2 CFR 170 Appendix A. Cause: Policies and procedures and internal controls were not in place to ensure compliance with the FFATA reporting requirements. Effect or potential effect: Fairview Health Services did not report the necessary FFATA report for first-tier subawards over $30,000 to the FFATA Subaward Reporting System. Questioned costs: None. Context: Total subrecipient expenditures subject to FFATA reporting were $155,996 for the year ended December 31, 2024 and total Federal expenditures were $1,656,727 for the year ended December 31, 2024. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: We recommend that Fairview Health Services management take immediate action to ensure compliance with the reporting requirements of the FFATA. Views of responsible officials: Management agrees with the finding. The FFATA report was filed on April 15, 2025. Fairview has established an internal control to ensure timely filing of FFATA reports in the future.
Finding 2024-002 Procurement and Suspension and Debarment Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Uniform Guidance 2 CFR Section 200.320 (a)(2) states regarding the applicability of simplified acquisition procedures: “The aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. “ Section V.A.1.a.ii of the procurement policy of Fairview Health Services requires that for procurements by small purchase ($10,000–$249,000), where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from three qualified sources. If three separate qualified sources cannot be obtained the reason needs to be formally documented. Condition: For one procurement transaction tested, we noted that Fairview Health Services did not complete a sole-source justification form timely to support the vendor that was selected. Cause: Management does not have sufficient internal controls in place to ensure that Fairview Health Services’ procurement policies are followed for all procurement transactions prior to entering the procurement. Effect or potential effect: Fairview Health Services entered into a procurement that did not go through a competitive solicitation process. Questioned costs: None Context: Total Federal expenditures subject to procurement for HPP were $616,107 for the year ended December 31, 2024. Total expenditures related to the procurement at issue were $29,041. Total Federal expenditures were $1,656,727 for the year ended December 31, 2024. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should review its policies and procedures to ensure all procurement transactions are in accordance with Fairview Health Services’ procurement policies and have the appropriate supporting documentation. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding. Fairview updated its internal control processes to better retain and document sole source procurement justification before entering vendor agreements. A standard form for sole source justification will be implemented to enhance documentation.
Finding 2024-003 Procurement and Suspension and Debarment Identification of the federal program: Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Uniform Guidance 2 CFR Section 200.320 (a)(2) states regarding the applicability of simplified acquisition procedures: “The aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. “ Section V.A.1.a.ii of the procurement policy of Fairview Health Services requires that for procurements by small purchase ($10,000-$249,000), where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from three qualified sources. If three separate qualified sources cannot be obtained the reason needs to be formally documented. Condition: The data used in evaluating the vendors for suspension and debarment was not reviewed and approved. Cause: Management does not have internal controls in place to require the review and approval of the data used in evaluation of vendors for suspension and debarment. Effect or potential effect: Suspension and debarment results may not be accurate. As a result, federal funds may be used to pay a contractor that is suspended or debarred. Questioned costs: None Context: Total Federal expenditures subject to suspension and debarment were $947,686, representing 57% of total federal expenditures of $1,656,727 for the year ended December 31, 2024. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should implement internal controls over the review and approval of the data used in suspension and debarment analysis. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding. Starting June 2025, the monthly suspension and debarment file will be reviewed. A signed statement confirming its accuracy will be included post-review. The accounts payable standard work document will be updated accordingly.
Finding 2024-004 Internal Controls over Allowability Identification of the federal program: Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: Fairview management did not retain documentation of review and approval of the fringe benefit rate calculation. In addition, Fairview management did not retain documentation of review and approval of supplies expenses for allowability. Cause: Fairview Health Services did not have internal controls in place that require supporting documentation of review and approval of the fringe benefit rate calculation and review and approval of supplies expenses for allowability. Effect or potential effect: Expenses may be charged to the federal award that are not in compliance with the federal grant agreements. Questioned costs: None. Context: For Assistance Listing No. 93.817, total fringe benefit expenses were $104,506, representing 6% of total federal expenditures of $1,656,727 for the year ended December 31, 2024. For Assistance Listing No. 93.817, total supplies expenses were $85,328, representing 5% of total federal expenditures of $1,656,727 for the year ended December 31, 2024. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should enhance internal controls to require the review and approval of the fringe benefit rate calculation and review and approval of supplies expenses for allowability. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding. The accounting manager reviewed and approved the updated 2025 fringe benefit analysis with 2024 actuals on February 28, 2025. Upon finalization of the 2025 budget, the analysis will be revised and reviewed again. Accounting will collect evidence of review and approval of supply expenditure throughout the year to ensure proper retention of the documentation.
FINDING 2024-001 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): FY 2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 WHITLEY COUNTY 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 2023-003. Condition and Context The County received a total COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) allocation of $6,597,109 and chose to calculate its own revenue loss amount, which exceeded the County's full allocation amount, thus, enabling them to use up to the full amount for government services. All SLFRF program funds expended to date have been expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the County was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the County's policies and procedures related to suspension and debarment requirements, the County disclosed its process is for the County Attorney to review agreements or contracts to ensure that they include language related to suspension and debarment but that there were no processes in place during the audit period to verify the suspension and debarment status of vendors which did not have written contracts in place with the County. Two covered transactions for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were selected for testing. The two covered transactions selected totaled $60,210. Each transaction was examined to determine whether the County verified the suspension and debarment status of the vendor prior to payment. Based on inquiry with the County, we determined that neither vendor had a written contract in place. The County did not otherwise verify vendors were neither suspended nor debarred or excluded or disqualified from participating in federal assistance programs or activities 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: INDIANA STATE BOARD OF ACCOUNTS 14 WHITLEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause After a previous Indiana State Board of Accounts audit, the County established procedures to include a suspension and debarment clause in agreements or contracts; however, it did not establish procedures to verify the suspension and debarment status of vendors which did not have written contracts in place with the County because the County was unaware of this requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County 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 identified. Recommendation We recommended that management of the County strengthen its system of internal controls to ensure that all covered transactions exceeding $25,000 or more, all or in part with federal funds, are not suspended, debarred, or otherwise excluded from participating in federal programs prior to entering into any contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 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): FY 2024 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context Recipients are required to submit program invoices to the Indiana Department of Health (IDOH) via email. Information to be reported includes, but is not limited to, the number of cases performed during the grant's period of performance. The County submitted one program invoice as required during the audit period; however, there were no internal controls in place that would likely be effective in preventing, or detecting and correcting, noncompliance related to the reporting requirements. The program invoices were prepared and submitted by one employee without an oversight, review, or approval process to ensure accuracy and completeness. The lack of internal controls over program invoices 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 County, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 16 WHITLEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the County cannot ensure that the reports submitted are materially accurate and correct. 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 to ensure that the County provides the IDOH with complete and accurate information for the program invoices. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
VA Supportive Services for Veteran Families Program FFAL #64.033, 20-SD-136-23, 10/1/2022 – 3/1/2024 FFAL #64.033, 20-SD-136-24, 10/1/2023 – 12/31/2024 Reporting Material Weakness in Internal Control over Compliance Criteria: 2 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 conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: No review and approval processes are in place over quarterly progress reports. Cause: Management did not have review procedures and processes in place over the quarterly progress reports. Effect: Without review procedures and processes in place over reporting, demonstrating the program complies with laws, regulations, and other compliance requirements is difficult. Additionally, not having an oversight process over reporting could result in a reasonable possibility reports that are inaccurate or incomplete could be submitted. Questioned Costs: None reported Context/Sampling: Included under the two award letters of the federal program, one annual financial report and one quarterly progress report was reviewed in the Organization’s fiscal year. In addition, two monthly HMIS reports were reviewed in the Organization’s fiscal year. There was a total of 18 reports filed. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures and control processes to incorporate an independent review and approval over reporting and retain documentation to support the review was performed. Views of Responsible Officials: Management is in agreement.
VA Supportive Services for Veteran Families Program FFAL #64.033, 20-SD-136-23, 10/1/2022 – 3/1/2024 FFAL #64.033, 20-SD-136-24, 10/1/2023 – 12/31/2024 Reporting Material Weakness in Internal Control over Compliance Criteria: 2 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 conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: No review and approval processes are in place over quarterly progress reports. Cause: Management did not have review procedures and processes in place over the quarterly progress reports. Effect: Without review procedures and processes in place over reporting, demonstrating the program complies with laws, regulations, and other compliance requirements is difficult. Additionally, not having an oversight process over reporting could result in a reasonable possibility reports that are inaccurate or incomplete could be submitted. Questioned Costs: None reported Context/Sampling: Included under the two award letters of the federal program, one annual financial report and one quarterly progress report was reviewed in the Organization’s fiscal year. In addition, two monthly HMIS reports were reviewed in the Organization’s fiscal year. There was a total of 18 reports filed. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures and control processes to incorporate an independent review and approval over reporting and retain documentation to support the review was performed. Views of Responsible Officials: Management is in agreement.
Finding 2024-001 Federal Program: Formula Grants for Rural Areas and Tribal Transit Assistance Listing Number: 20.509 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Per 2 CFR §200.318(i), non-Federal entities must maintain records sufficient to detail the history of procurement, including the rationale for the method of procurement and the basis for contractor selection. For sole source procurements, 2 CFR §200.320(c) outlines specific conditions under which noncompetitive procurement is allowable and requires written justification. 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 award in compliance with federal statutes, regulations, and the terms and conditions of the award. Condition: During our review of procurement procedures, we noted that the entity selected a sole source vendor but did not maintain documentation supporting the justification for the noncompetitive procurement. While the procurement itself did not violate Uniform Guidance requirements, the absence of supporting documentation indicates a weakness in internal controls over procurement recordkeeping. Cause: Although the entity has established procedures for documenting sole source procurement decisions, those procedures were not followed in this instance. This appears to have been an isolated oversight rather than a systemic issue. Effect: Although the procurement may have met the criteria for a sole source, the lack of documentation limits transparency and may hinder the entity’s ability to demonstrate compliance in future audits. Repeat Finding from Prior Year: No Recommendation: We recommend that management strengthen internal controls over procurement documentation by implementing procedures to ensure that all sole source procurements are supported by written justifications and retained in accordance with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding.
Assistance Listing Number, Federal Agency, and Program Name - 93.224, 93.527; Health Center Program Cluster Federal Award Identification Number and Year - H8LCS50692 and H80CS00190 - 2024 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The 2 CFR Section 200.303 requires that nonfederal entities receiving federal awards establish, document, and maintain effective internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, in accordance with notice of awards and the Uniform Data System (UDS) Health Center Data Reporting Requirements, the health center is required to submit an annual performance report that includes data that reflects all activities in the HRSA health center project. Condition - Internal control procedures were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, due to entries identified and recorded during the 2024 financial statement audit of the Company, the data submitted within the annual performance report was not accurate. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During control testing of reporting (sample size of two), internal control procedures were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, financial statement adjusting entries that were known and adjusted for by the final reporting deadline of March 31, 2025 were not communicated to the reporting agency timely. Cause and Effect - Controls were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, the Company did not have controls in place to ensure financial statement adjusting entries that were known and adjusted for by the final reporting deadline of March 30, 2025 were communicated to the reporting agency timely. As a result, the reports filed with HRSA are materially incorrect. Recommendation - We recommend the Company implement procedures to document the internal controls they have in place surrounding review of reports and implement controls to timely communicate financial statement adjustments to the reporting agency prior to the final deadline of March 31, 2025. Views of Responsible Officials and Corrective Action Plan - Since the FY 2024 financial and single audit adjustments were not discovered and completed prior to the UDS submission deadline of March 31, 2025 and there is no mechanism to change UDS values after the deadline, we will move the audit engagement to earlier in the year in 2026 to allow time to correct any UDS issues prior to the March 31, 2026 deadline.
Assistance Listing Number, Federal Agency, and Program Name - 93.224, 93.527; Health Center Program Cluster Federal Award Identification Number and Year - H8LCS50692 and H80CS00190 - 2024 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The 2 CFR Section 200.303 requires that nonfederal entities receiving federal awards establish, document, and maintain effective internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, in accordance with notice of awards and the Uniform Data System (UDS) Health Center Data Reporting Requirements, the health center is required to submit an annual performance report that includes data that reflects all activities in the HRSA health center project. Condition - Internal control procedures were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, due to entries identified and recorded during the 2024 financial statement audit of the Company, the data submitted within the annual performance report was not accurate. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During control testing of reporting (sample size of two), internal control procedures were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, financial statement adjusting entries that were known and adjusted for by the final reporting deadline of March 31, 2025 were not communicated to the reporting agency timely. Cause and Effect - Controls were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, the Company did not have controls in place to ensure financial statement adjusting entries that were known and adjusted for by the final reporting deadline of March 30, 2025 were communicated to the reporting agency timely. As a result, the reports filed with HRSA are materially incorrect. Recommendation - We recommend the Company implement procedures to document the internal controls they have in place surrounding review of reports and implement controls to timely communicate financial statement adjustments to the reporting agency prior to the final deadline of March 31, 2025. Views of Responsible Officials and Corrective Action Plan - Since the FY 2024 financial and single audit adjustments were not discovered and completed prior to the UDS submission deadline of March 31, 2025 and there is no mechanism to change UDS values after the deadline, we will move the audit engagement to earlier in the year in 2026 to allow time to correct any UDS issues prior to the March 31, 2026 deadline.
FINDING 2024-001 Subject: CDBG - Entitlement/Special Purpose Grants Cluster - Reporting, Special Tests and Provisions - Environmental Reviews, Special Tests and Provisions - Rehabilitation Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-19-MC-18-0021, B-20-MC-18-0021, B-21-MC-18-0021, B-22-MC-18-0021, B-23-MC-18-0021 Compliance Requirements: Reporting, Special Tests and Provisions - Environmental Reviews Special Tests and Provisions - Rehabilitation Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Reporting, Special Tests and Provisions - Environmental Reviews, and Special Tests and Provisions - Rehabilitation compliance requirements. Reporting The Community Development Block Grant (CDBG) recipients are required to submit a Financial Summary Report (PR26) annually. The report is generated from information entered by the City into the U.S. Department of Housing and Urban Development (HUD) Integrated Disbursement Information System (IDIS). The Financial Summary Report (PR26) was prepared with supporting documentation attached and submitted by one employee without evidence of an oversight or review process to ensure that the report was accurate and complete. Special Tests and Provisions - Environmental Reviews CDBG recipients are required to prepare an environmental review over projects that are deemed necessary and maintain written documentation for the projects that are deemed not necessary to have an environmental review. The CDBG Program Manager prepared environmental reviews when necessary and prepared documentation when the project was exempt from the requirement; however, there was no review or oversight process in place to ensure that the environmental reviews were completed and the required documentation was completed or being maintained. Special Tests and Provisions - Rehabilitation CDBG recipients are required to conduct onsite inspections prior to rehabilitation work being completed to document the deficiencies of the residential property and include that information in a scope of work contract with the homeowner. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF LA PORTE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The CDBG Program Manager conducted onsite inspections of the rehabilitation projects and maintained the case files where required documentation was maintained. However, there was no oversight or review process in place to ensure that the inspections were completed or that the required information was properly included in the contract with the homeowner. The lack of internal controls was systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed or implemented by management of the City to ensure that policies and procedures were in place related to the Reporting, Special Tests and Provisions - Environmental Reviews, and Special Tests and Provisions - Rehabilitation compliance requirements to ensure the amounts reported were accurate and the proper documentation that was to be maintained was maintained properly. Effect Without the proper implementation of an effectively designed system of internal controls over the Reporting, Special Tests and Provisions - Environmental Reviews, and Special Tests and Provisions - Rehabilitation compliance requirements, the City cannot ensure that the reports submitted are materially accurate and correct and that the proper documentation is properly being maintained. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls over the Financial Summary Report (PR26), environmental reviews and supporting documentation, and inspections for rehabilitation work to ensure the inspections are completed and the required information is included in the Scope of Work Contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding: 2024-001 Debt service reserve fund Program Name Title: Community Facilities Loans and Grants Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Material weakness Compliance Requirement: Special Tests and Provisions Repeat Finding: Yes Questioned Cost: None Criteria: 2 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 conditions of the federal award. Condition: The Hospital did not fully fund a debt reserve fund as required by the federal award agreement. Cause: The Hospital has experienced a financial crisis where all available monies were used to fund payroll and pay down immediate debts, resulting in the use of any amounts previously reserved. Effect: The lack of adequate policies governing the monitoring of the required debt covenants and the establishment and funding of reserves increases the risk that employees may not be able to detect and correct noncompliance in a timely manner. Recommendation: We recommend the Hospital fund the required debt reserve fund as soon as possible and provide funds in accordance with the federal award agreement. We also recommend the Hospital create internal controls to monitor debt covenants. View of Responsible Officials: Management agrees with the finding.
FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment 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): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF PAOLI 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 2023-002. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town entered into contracts with three vendors in a prior year to provide goods and services for the duration of the Town's wastewater plant construction project. The total contract expenditures for all three vendors fell under the simplified acquisition threshold. The Town paid all three vendors with grant funds during the audit period, and all three were selected for testing accordingly. For two of the vendors, the Town properly procured the goods and services through the bidding process. For the third vendor, with disbursements totaling $106,269 in 2024, the Town was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. The lack of internal controls and noncompliance were isolated to one vendor throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where 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 (E) Any or all bids may be rejected if there is a sound documented reason. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Cause The vendor in question was an engineering firm that the Town has utilized for various projects over the course of many years. For continuity purposes, the Town chose to limit competition when awarding the contract but was unaware of the requirements necessary to do so. Since this was a multi-year award for which the Town entered into the contract in a prior year, the Town was unable to correct the noncompliance for the current audit period. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the Town could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting 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): FY2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town was required to submit the following reporting to the Department of Agriculture annually: • Statement of Budget, Income, and Equity (Form RD 442-2) • Balance Sheet (Form RD 442-3) INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Form RD 442-2 covers financial operations relating to the Town's wastewater utility and the Form RD 442-3 presents the financial status of the wastewater utility. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town did not submit the Form RD 442-2 during the audit period as required. The Town submitted the Form RD 442-3 reporting 2023 data in 2024 as required. However, this report is intended to be a comparative balance sheet as described in the USDA Rural Utilities Service Borrower's Guide. The Town did not include comparative data for 2022 in the report. There was also no documentation or other evidence of an oversight, review, or approval process for the report that was filed. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget'. (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. . . ." Cause The Clerk-Treasurer was only in her first year of her first term in office when these were due. As such, she was unfamiliar with the reporting requirements of the grant. Effect Without a proper system of internal controls in place that operated effectively, the Town did not file one of the two required reports, and the report that was filed was incomplete. As a result, material noncompliance occurred and remained undetected. By not reporting the comparative data, all information needed to determine the true financial status of the Town was not readily available. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are filed timely, accurately, and contain all the required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF Program) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4316 - 2024, SLFRP0126 - 2024 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number(s): CMS # 186974, CMS# 187546 Award Period: 03/03/2021 – 12/31/2026; 8/1/2024 – 6/30/2026 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 2 CFR Section 180, non-Federal entities receiving Federal awards must verify that lower-tier entities, as defined in 2 CFR Section 180.995, are not suspended, debarred, or otherwise excluded from participating in transactions. Per 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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: During testing over suspension and debarment, it was noted that proof of suspension and debarment verification could not be found for 6 out of 19 selections tested. Questioned costs: None. Context: Although verification records were not maintained, through audit procedures, it was confirmed that the 6 contractors were not suspended or debarred through checking the System for Award Management (SAM.gov) exclusions list. The City has an existing suspension and debarment policy, however, the unique nature of the funding and award segregation led to unclear compliance responsibilities among agencies at the City. Cause: The CSLFRF funds were distributed across multiple agencies at the City, making the responsibility for suspension and debarment verification unclear. Additionally, the contractors in question are also used for various non-federal projects within the City. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs.Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City incorporate specific language into its existing procurement process—particularly regarding suspension and debarment requirements—by clearly assigning responsibility for conducting these checks to the agency receiving and overseeing the federal award, both prior to any federal spending and on a recurring basis thereafter. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Child Care and Development Block Grant and Child Care Mandatory and Matching Funds of the Child Care and Development Fund (Child Care and Development Fund Cluster) Assistance Listing Number: 93.575 and 93.596 Federal Award Identification Number and Year: 2101COCCC5, 2101COCDC6, 2301COCCDD, 2302COCCDD, 2402COCCDD, 2302COCCDF, 2402COCCDF, 2301COCCDF, 2302COCCDF Pass-Through Agency: Colorado Department of Human Services Pass-Through Number(s): None provided Award Period: 10/1/2022 – 9/30/2026; 10/1/2023 – 9/30/2026, 7/1/2023 – 6/30/2024 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures in place to ensure terminated employees are removed from the State system within a reasonable timeframe. Condition: During our testing, we noted 1 employee out of 3 employees selected for testing whose user access rights were not removed from the Colorado Benefits Management System (CBMS) within a reasonable timeframe after employment change at the City. Questioned costs: None. Context: During our evaluation of terminated users within CBMS, we identified a lack of compensating control for timely removal of employees due to IT Department turnover. One employee terminated in 2023 did not have their access formally revoked until February 2025. However, CBMS passwords are automatically locked after 30 days, disabled after 60 days, and deactivated after 90 days. Login records confirmed no system access post-termination. Cause: The City experienced turnover and did not have a compensating control to ensure that CBMS user access rights are revoked when employees separate from the City or change departments that do not require them to keep their CBMS access.Effect: Employees who are terminated or no longer require access to the system, who continue to have access after termination, could make changes within CBMS that impact the City’s federal program activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City implement a control to ensure the CBMS user access rights are offboarded timely when employees separate employment or move departments that do not require them to keep CBMS access. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Child Care and Development Block Grant and Child Care Mandatory and Matching Funds of the Child Care and Development Fund (Child Care and Development Fund Cluster) Assistance Listing Number: 93.575 and 93.596 Federal Award Identification Number and Year: 2101COCCC5, 2101COCDC6, 2301COCCDD, 2302COCCDD, 2402COCCDD, 2302COCCDF, 2402COCCDF, 2301COCCDF, 2302COCCDF Pass-Through Agency: Colorado Department of Human Services Pass-Through Number(s): None provided Award Period: 10/1/2022 – 9/30/2026; 10/1/2023 – 9/30/2026, 7/1/2023 – 6/30/2024 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures in place to ensure terminated employees are removed from the State system within a reasonable timeframe. Condition: During our testing, we noted 1 employee out of 3 employees selected for testing whose user access rights were not removed from the Colorado Benefits Management System (CBMS) within a reasonable timeframe after employment change at the City. Questioned costs: None. Context: During our evaluation of terminated users within CBMS, we identified a lack of compensating control for timely removal of employees due to IT Department turnover. One employee terminated in 2023 did not have their access formally revoked until February 2025. However, CBMS passwords are automatically locked after 30 days, disabled after 60 days, and deactivated after 90 days. Login records confirmed no system access post-termination. Cause: The City experienced turnover and did not have a compensating control to ensure that CBMS user access rights are revoked when employees separate from the City or change departments that do not require them to keep their CBMS access.Effect: Employees who are terminated or no longer require access to the system, who continue to have access after termination, could make changes within CBMS that impact the City’s federal program activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City implement a control to ensure the CBMS user access rights are offboarded timely when employees separate employment or move departments that do not require them to keep CBMS access. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grants/Entitlement Grants Assistance Listing Number: 14.218 Federal Award Identification Number and Year: B-19-MC-08-0005, 2019; B-20-MC-08-0005, 2020; B-21- MC-08-0005, 2021; B-20-MW-08-0005, 2020 Pass-Through Agency: None Pass-Through Number(s): N/A Award Period: 1/1/2019-9/1/2031 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Under 2 CFR Part 170, recipients of federal awards are required to report subaward information to ensure transparency and accountability in the use of federal funds. This regulation, which implements the Federal Funding Accountability and Transparency Act of 2006 (as amended by the Digital Accountability and Transparency Act of 2014), mandates that recipients submit accurate data to the Federal Subaward Reporting System (FSRS) for publication on USAspending.gov. Specifically, 2 CFR Part 200, Part 3-L – Reporting specifically states: “…(b) Compare the award information accessed in step 2.a to the subaward/subcontract documents maintained by the recipient to assess if— (i) applicable subaward obligations /modifications have been reported, (ii) the key data elements (see above) were accurately reported and are supported by the source documentation, and (iii) the action was reported in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made.” Further, 2 CFR Part 200 § 200.303 requires non-Federal entities to: 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: We were unable to obtain evidence confirming the timely submission of two out of six reports reviewed. Additionally, the review process for these reports was not formally documented, and no records of the review were retained. Questioned costs: None. Context: During testing of FFATA report submissions for six subawards, we identified two instances where the awards were obligated in November 2023, but the corresponding FFATA reports were not submitted until January 11, 2024, and January 17, 2024, eleven and seventeen dates after the due date, respectively. While the content of the reports appeared appropriate, the submissions were not timely. Additionally, there was no concrete documentation of the review process either before or after submission. Transactions Tested Subaward not reported Timeliness of report unable to be determined Subaward amount incorrect1 Subaward missing key elements1 6 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Timeliness of report unable to be determined Subaward amount incorrect11 Subaward missing key elements $1,436,927 $0 $911,927 $0 $0 Cause: The City experienced staff turnover within the Denver Economic Development & Opportunity department, and the individuals responsible for submitting the reports are no longer employed. Additionally, the City lacked a formal process to document submission dates and retain evidence of report review and approval. Effect: Failure to submit the subaward reports to FSRS in a timely manner places the Department out of compliance with federal reporting requirements and exposes it to potential federal sanctions. Additionally, the absence of documented review and approval processes undermines accountability and makes it difficult to verify compliance, increasing the risk of further scrutiny or penalties from oversight bodies. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City establish and implement a formal process to consistently retain documentation of FFATA report submission dates, as well as evidence of the review and approval of each report submitted. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grants/Entitlement Grants Assistance Listing Number: 14.218 Federal Award Identification Number and Year: B-19-MC-08-0005, 2019; B-20-MC-08-0005, 2020; B-21- MC-08-0005, 2021; B-20-MW-08-0005, 2020 Pass-Through Agency: None Pass-Through Number(s): N/A Award Period: 1/1/2019-9/1/2031 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Under 2 CFR Part 170, recipients of federal awards are required to report subaward information to ensure transparency and accountability in the use of federal funds. This regulation, which implements the Federal Funding Accountability and Transparency Act of 2006 (as amended by the Digital Accountability and Transparency Act of 2014), mandates that recipients submit accurate data to the Federal Subaward Reporting System (FSRS) for publication on USAspending.gov. Specifically, 2 CFR Part 200, Part 3-L – Reporting specifically states: “…(b) Compare the award information accessed in step 2.a to the subaward/subcontract documents maintained by the recipient to assess if— (i) applicable subaward obligations /modifications have been reported, (ii) the key data elements (see above) were accurately reported and are supported by the source documentation, and (iii) the action was reported in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made.” Further, 2 CFR Part 200 § 200.303 requires non-Federal entities to: 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: We were unable to obtain evidence confirming the timely submission of two out of six reports reviewed. Additionally, the review process for these reports was not formally documented, and no records of the review were retained. Questioned costs: None. Context: During testing of FFATA report submissions for six subawards, we identified two instances where the awards were obligated in November 2023, but the corresponding FFATA reports were not submitted until January 11, 2024, and January 17, 2024, eleven and seventeen dates after the due date, respectively. While the content of the reports appeared appropriate, the submissions were not timely. Additionally, there was no concrete documentation of the review process either before or after submission. Transactions Tested Subaward not reported Timeliness of report unable to be determined Subaward amount incorrect1 Subaward missing key elements1 6 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Timeliness of report unable to be determined Subaward amount incorrect11 Subaward missing key elements $1,436,927 $0 $911,927 $0 $0 Cause: The City experienced staff turnover within the Denver Economic Development & Opportunity department, and the individuals responsible for submitting the reports are no longer employed. Additionally, the City lacked a formal process to document submission dates and retain evidence of report review and approval. Effect: Failure to submit the subaward reports to FSRS in a timely manner places the Department out of compliance with federal reporting requirements and exposes it to potential federal sanctions. Additionally, the absence of documented review and approval processes undermines accountability and makes it difficult to verify compliance, increasing the risk of further scrutiny or penalties from oversight bodies. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City establish and implement a formal process to consistently retain documentation of FFATA report submission dates, as well as evidence of the review and approval of each report submitted. Views of responsible officials: There is no disagreement with the audit finding.
2024-001 Finding – Federal Award Type: Financial Reporting – Material Weakness in Internal Control over Compliance. Identification of Federal Program: AL Number: 15.507 WaterSMART Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition / Context: It was noted during the audit that there were insufficient internal controls over financial reports submitted, as there was not sufficient documentation of review of the financial report prior to the submission. Cause: Procedures were not in place to ensure that Deschutes Land Trust is maintaining adequate internal controls over compliance in regards to financial reporting requirements. Key duties and functions are not segregated among organization personnel and internal control policies and procedures are inadequate to properly define the roles and responsibilities of personnel performing key functions. Effect: Failure to maintain sufficient internal controls over financial reporting related to federal grants may result in inaccurate reporting and/or non‐compliance with the provisions of applicable requirements. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding financial reporting over federal grants, which include proper segregation of duties.
Assistance Listing, Federal Agency, and Program Name - ALN 21.027, U.S. Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Award Identification Number and Year - FAIN not available, 2022 Pass through Entity - N/A Direct funded Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the comptroller general of the United States or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - The City did not have controls in place surrounding the review of annual performance reporting. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - As the City received less than $10 million of CSLFRF funding, the City is required to submit an annual report for the program and have controls in place to ensure the report is filed on time and no errors in reporting occur. During the review of internal controls over the annual performance report required by the program, the City was unable to produce evidence of a secondary review of the annual report before or after submission; however, the report was filed on time and no errors in reporting were noted as a result of our audit procedures. Cause and Effect - Due to significant staff turnover at the City, the City did not have controls in place over reporting for this grant. The lack of countrols could have resulted in material misstatements to the reports filed with the funding agency. Recommendation - In order to ensure reporting requirements are met and that reports are accurate and filed timely, we recommend the City incorporate a formal review process of the reports. Views of Responsible Officials and Corrective Action Plan - The City agrees with this finding. The City is in the process of strengthening our formal grant review process for all reports to ensure accuracy and timeliness. See the corrective action plan.
Assistance Listing, Federal Agency, and Program Name - ALN 14.251, U.S. Department of Housing and Urban Development, Economic Development Initiative Special Project, Neighborhood Initiative and Miscellaneous Grants Federal Award Identification Number and Year - B-22-CP-CO-0158, 2022 Pass through Entity - N/A Direct funded Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the comptroller general of the United States or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - The City did not have controls in place surrounding the filing of semi annual performance and financial reports nor did it submit the required reports. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - According to the terms of the award, the City is required to submit a performance report to the granting agency on a semi annual basis and must include a completed Federal financial report as an attachment to each performance report. Cause and Effect - The City was unable to access the granting agency's web portal and, therefore, did not submit the required reports during the year. Recommendation - In order to ensure reporting requirements are met and that reports are accurate and filed timely, we recommend the City incorporate a formal review process of the reports. Views of Responsible Officials and Planned Corrective Actions - The City agrees with this finding. The City is in the process of strengthening our formal grant review process for all reports to ensure accuracy and timeliness. See the corrective action plan.
Assistance Listing, Federal Agency, and Program Name - 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAIN not available, 2024 Pass through Entity - Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal 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. Condition - The City did not have controls in place surrounding the review of requests for reimbursement to ensure the underlying invoices were allowable and that the local matching contribution was calculated correctly. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The same individual at the City prepared and submitted the requests for reimbursement without a second person reviewing the request. The City submitted two requests for reimbursement during the year under audit with grant reimbursement amounts totalling $550,495. The City submitted a third request for reimbursement subsequent to the year under audit that included 2024 expenditures of federal awards in the amount of $653,591. Cause and Effect - The City did not have a policy in place to ensure an individual in the finance department reviewed the requests for reimbursement prepared by department staff; however, no unallowable costs, incorrect matching calculations, or inappropriate reimbursement requests were noted as a result of our audit procedures. Recommendation - We recommend the City implement a process to ensure all requests for reimbursement are reviewed prior to submission. Views of Responsible Officials and Planned Corrective Actions - The City agrees with this finding. The grant accountant is revising our grant regulations and requirements to improve our internal controls and processes. Part of this update will include a requirement that all RFRs prepared by departments are forwarded to the Finance department for review and approval prior to submission. See the corrective action plan.
Federal Agency: Department of Health and Human Services Federal Program Title: Title IV-E Foster Care Assistance Listing Number: 93.658 Pass-Through Agency: Four Oaks Family & Children Pass-Through Number(s): FWBP-CPS-24-002 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significancy Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over drawdown requests were not always properly followed. Questioned Costs: None Context: 1 of 3 drawdown requests in our sample were missing approvals. Cause: LSI has a limited number of individuals in the finance department and has experienced significant turnover in the finance department. Effect: The lack of internal controls over cash management provides an opportunity for noncompliance. Repeat Finding: Yes – see 2023-003 Recommendation: We recommend LSI design controls to ensure an adequate review process is in place for all drawdown requests. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: Department of Health and Human Services Federal Program Title: Title IV-E Foster Care Assistance Listing Number: 93.658 Pass-Through Agency: Four Oaks Family & Children Pass-Through Number(s): FWBP-CPS-24-002 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significancy Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over drawdown requests were not always properly followed. Questioned Costs: None Context: 1 of 3 drawdown requests in our sample were missing approvals. Cause: LSI has a limited number of individuals in the finance department and has experienced significant turnover in the finance department. Effect: The lack of internal controls over cash management provides an opportunity for noncompliance. Repeat Finding: Yes – see 2023-003 Recommendation: We recommend LSI design controls to ensure an adequate review process is in place for all drawdown requests. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: Department of Health and Human Services Federal Program Title: Title IV-E Foster Care Assistance Listing Number: 93.658 Pass-Through Agency: Four Oaks Family & Children Pass-Through Number(s): FWBP-CPS-24-002 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significancy Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over drawdown requests were not always properly followed. Questioned Costs: None Context: 1 of 3 drawdown requests in our sample were missing approvals. Cause: LSI has a limited number of individuals in the finance department and has experienced significant turnover in the finance department. Effect: The lack of internal controls over cash management provides an opportunity for noncompliance. Repeat Finding: Yes – see 2023-003 Recommendation: We recommend LSI design controls to ensure an adequate review process is in place for all drawdown requests. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: Department of Health and Human Services Federal Program Title: Unaccompanied Children Program Assistance Listing Number: 93.676 Pass-Through Agency: Global Refuge Pass-Through Number(s): 90ZU0521-01, 02 & 90ZU0439-02, 03 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over disbursements were not always properly followed. Questioned Costs: None Context: 1 of the 54 period of performance selections in our sample did not have timesheet approvals. Cause: LSI has a limited number of individuals in the finance department and has experienced significant turnover in the finance department. Effect: The auditor noted no instances of noncompliance with the allowability of costs or support for costs; the lack of internal controls over disbursements provides an opportunity for noncompliance. Repeat Finding: Yes – see 2023-005 Recommendation: We recommend LSI design controls to ensure an adequate review process is in place for all disbursements. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: Department of Health and Human Services Federal Program Title: Unaccompanied Children Program Assistance Listing Number: 93.676 Pass-Through Agency: Global Refuge Pass-Through Number(s): 90ZU0521-01, 02 & 90ZU0439-02, 03 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over disbursements were not always properly followed. Questioned Costs: None Context: 1 of the 54 period of performance selections in our sample did not have timesheet approvals. Cause: LSI has a limited number of individuals in the finance department and has experienced significant turnover in the finance department. Effect: The auditor noted no instances of noncompliance with the allowability of costs or support for costs; the lack of internal controls over disbursements provides an opportunity for noncompliance. Repeat Finding: Yes – see 2023-005 Recommendation: We recommend LSI design controls to ensure an adequate review process is in place for all disbursements. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: Department of Health and Human Services Federal Program Title: Unaccompanied Children Program Assistance Listing Number: 93.676 Pass-Through Agency: Global Refuge Pass-Through Number(s): 90ZU0521-01, 02 & 90ZU0439-02, 03 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over disbursements were not always properly followed. Questioned Costs: None Context: 1 of the 54 period of performance selections in our sample did not have timesheet approvals. Cause: LSI has a limited number of individuals in the finance department and has experienced significant turnover in the finance department. Effect: The auditor noted no instances of noncompliance with the allowability of costs or support for costs; the lack of internal controls over disbursements provides an opportunity for noncompliance. Repeat Finding: Yes – see 2023-005 Recommendation: We recommend LSI design controls to ensure an adequate review process is in place for all disbursements. Views of Responsible Officials: There is no disagreement with the audit finding.
2024 – 002: Suspension and Debarment: Federal Agency: U.S. Department of Treasury, Federal Program Name: COVID-19 State and Local Fiscal Recovery Funds, Assistance Listing Number: 21.027, Federal Award Identification Number and Year: SLRFP0410 – 2024, Award Period: January 1, 2024 – December 31, 2024, Type of Finding: Significant Deficiency in Internal Control over Compliance; Other Matter Criteria or specific requirement: 2 CFR § 180.300 requires that before the County enters into a covered transaction with an entity at a lower tier, the County must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. 2 CFR 200.303 requires that the entity have sufficient controls over compliance related to federal awards. Condition: During our testing, we noted an instance where there was no documentation of this verification being performed. Questioned costs: None Context: During our testing, it was noted that one of six contracts that were tested were entered into without the County verifying and retaining documentation of said verification that the vendor was not suspended or debarred by the federal government. Cause: The County was unaware this type of contract met the criteria applicable for suspension and debarment. Effect: The auditor noted no instances of noncompliance with the provisions of procurement, suspension, and debarment; however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: No. Recommendation: We recommend the County ensure that this suspension and debarment verification occurs before entering covered transactions and that supporting documentation of this internal control is retained. Views of responsible officials: Management does not disagree with the finding.
Finding 2024-002: U.S. Department of the Treasury Federal Financial Assistance Listing 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Controls over Compliance Criteria: 2 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 conditions of the federal award. Condition: The County’s reports submitted to the Department of Treasury were not reviewed and approved by a separate individual outside of the preparer. Cause: The County did not have an internal control process in place to ensure a secondary review and approval of the reports submitted to the Department of Treasury were performed by someone other than the preparer of the report. Effect: Without a secondary review and approval, there is a possibility that the report may not be accurately completed. Questioned Costs: None. Context / Sampling: For the Coronavirus State and Local Fiscal Recovery Funds, only one annual report was required to be filed. We tested the one annual report filed. Repeat Finding from Prior Year: Yes Recommendation: We recommend the County implement a control process which includes a secondary review and approval of the required reports to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the noted finding. Refer to Corrective Action Plan.
2024 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass through number: UH1WX Project #2365 – Award Year 2024 (Application 696220) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: 2023-001 Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51 54; Chapter 6, page(s) 65 & 93 95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non federal entity. Internal Control Per 2 CFR section 200.303(a), 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. 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 and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For thirteen of sixty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. The finding is recurring from the prior year as the corrective action plan developed by the Authority from the prior year finding was not implemented until December 2024, which is subsequent to when these expenditures were incurred by the Authority between fiscal years 2020 and 2022. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. Beginning in December 2024, as a commitment to strengthen our processes and ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible, management put a process in place to enhance procedures and controls for timesheets going forward to ensure full compliance with the Uniform Guidance requirements. This process was successfully implemented as of this date and for prospective periods. However, this process does not remedy the issue noted in the finding which relates to time worked from 2020-2022, which is before the process was in place. Therefore, the finding is repeated from the prior year.
Suspension and Debarment Prior Year Finding Number: 2023-003 Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLT0790; 2021 Pass-Through Agency: N/A – Direct Criteria: 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The City’s procurement policy requires a suspension and debarment clause be included in the contract and also requires the contract manager to verify the vendor is not suspended, debarred, or otherwise excluded at SAM.gov. Condition: The City did not maintain documentation of the verification that the vendor was not suspended or debarred at SAM.gov for one of 14 transactions tested. Questioned Costs: None. Context: 134 covered transactions were subject to suspension and debarment requirements. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City is not in compliance with federal regulations. Cause: The contract managers did not know verification of suspension and debarment using the federal listing was required. Recommendation: We recommend the City review its written policies and procedures and communicate with contract managers their responsibility for complying with the federal regulations and maintaining documentation to support that compliance. View of Responsible Official: Acknowledge
Subrecipient Monitoring Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLT0790; 2021 Pass-Through Agency: N/A – Direct Criteria: 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. Title 2 U.S. Code of Federal Regulations § 200.332 includes requirements such as evaluating the subrecipient’s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the award. Condition: The City did not have documentation of risk assessment procedures performed for two of the four subrecipients tested. Questioned Costs: None. Context: The City of Minneapolis has documented the subaward and subrecipient procedures that its staff are expected to follow. These procedures include the completion of a pre-award risk assessment form and for the form to be maintained in the contract file of the subrecipient. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City is not in compliance with federal regulations. Cause: City staff were not aware of the requirement to perform pre-award risk assessments with subrecipients. Recommendation: We recommend the City ensure that the City’s employees follow its procedures for completing risk assessments when contracting with subrecipients. View of Responsible Official: Concur