Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards that provides assurance that the entity is managing the federal awards in compliance with federal statues, regulation and conditions of the federal awards Condition and Context: Accounting tasks such as review and approval of expenditures applied to the grants play a key role in proving the accuracy of accounting data and information included in SEFA. During the audit, we noted various expenditures that did not have the proper approval by management prior to the charge being applied to the grant. Questioned Costs: None noted Effect: Costs could be charged to federal programs which are unallowed due to lack of review. Cause: The Organization experienced turnover in multiple positions in finance during the year which caused the review not to be consistent. By the end of 2024, the Organization had a formal process in place to ensure all expenditures were properly reviewed, however, we noted invoices in the early part of the year were not properly reviewed.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards that provides assurance that the entity is managing the federal awards in compliance with federal statues, regulation and conditions of the federal awards Condition and Context: Accounting tasks such as review and approval of expenditures applied to the grants play a key role in proving the accuracy of accounting data and information included in SEFA. During the audit, we noted various expenditures that did not have the proper approval by management prior to the charge being applied to the grant. Questioned Costs: None noted Effect: Costs could be charged to federal programs which are unallowed due to lack of review. Cause: The Organization experienced turnover in multiple positions in finance during the year which caused the review not to be consistent. By the end of 2024, the Organization had a formal process in place to ensure all expenditures were properly reviewed, however, we noted invoices in the early part of the year were not properly reviewed.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards that provides assurance that the entity is managing the federal awards in compliance with federal statues, regulation and conditions of the federal awards Condition and Context: Accounting tasks such as review and approval of expenditures applied to the grants play a key role in proving the accuracy of accounting data and information included in SEFA. During the audit, we noted various expenditures that did not have the proper approval by management prior to the charge being applied to the grant. Questioned Costs: None noted Effect: Costs could be charged to federal programs which are unallowed due to lack of review. Cause: The Organization experienced turnover in multiple positions in finance during the year which caused the review not to be consistent. By the end of 2024, the Organization had a formal process in place to ensure all expenditures were properly reviewed, however, we noted invoices in the early part of the year were not properly reviewed.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.576, Refugee and Entrant Assistance Discretionary Grants Federal Award Identification Number and Year: 90RE0316-01-00, 90RE0316-02-01, 90ZI0169-01-00, 90ZI0169-02-00 Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 – During our testing over reporting, we noted instances in which there was no evidence of review and/or approval. None of the 3 samples selected for testing had evidence of review or approval. Questioned Costs – N/A Cause/Effect – Client reported that they were not aware that they needed to keep records of proof of review. As a result, certain submitted reports could have been misstated. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – The Organization has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, the Organization is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. The Organization has corrected this administrative issue and is committed to maintaining compliance through ongoing audits. View of Responsible Officials and Corrective Action Plan - Chaldean American Ladies of Charity has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, CALC is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. CALC has corrected this administrative issue and is committed to maintaining compliance through ongoing audits.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.576, Refugee and Entrant Assistance Discretionary Grants Federal Award Identification Number and Year: 90RE0316-01-00, 90RE0316-02-01, 90ZI0169-01-00, 90ZI0169-02-00 Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 – During our testing over reporting, we noted instances in which there was no evidence of review and/or approval. None of the 3 samples selected for testing had evidence of review or approval. Questioned Costs – N/A Cause/Effect – Client reported that they were not aware that they needed to keep records of proof of review. As a result, certain submitted reports could have been misstated. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – The Organization has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, the Organization is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. The Organization has corrected this administrative issue and is committed to maintaining compliance through ongoing audits. View of Responsible Officials and Corrective Action Plan - Chaldean American Ladies of Charity has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, CALC is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. CALC has corrected this administrative issue and is committed to maintaining compliance through ongoing audits.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.576, Refugee and Entrant Assistance Discretionary Grants Federal Award Identification Number and Year: 90RE0316-01-00, 90RE0316-02-01, 90ZI0169-01-00, 90ZI0169-02-00 Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 – During our testing over reporting, we noted instances in which there was no evidence of review and/or approval. None of the 3 samples selected for testing had evidence of review or approval. Questioned Costs – N/A Cause/Effect – Client reported that they were not aware that they needed to keep records of proof of review. As a result, certain submitted reports could have been misstated. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – The Organization has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, the Organization is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. The Organization has corrected this administrative issue and is committed to maintaining compliance through ongoing audits. View of Responsible Officials and Corrective Action Plan - Chaldean American Ladies of Charity has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, CALC is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. CALC has corrected this administrative issue and is committed to maintaining compliance through ongoing audits.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.576, Refugee and Entrant Assistance Discretionary Grants Federal Award Identification Number and Year: 90RE0316-01-00, 90RE0316-02-01, 90ZI0169-01-00, 90ZI0169-02-00 Finding Type – Material weakness in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 – During our testing over reporting, we noted instances in which there was no evidence of review and/or approval. None of the 3 samples selected for testing had evidence of review or approval. Questioned Costs – N/A Cause/Effect – Client reported that they were not aware that they needed to keep records of proof of review. As a result, certain submitted reports could have been misstated. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – The Organization has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, the Organization is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. The Organization has corrected this administrative issue and is committed to maintaining compliance through ongoing audits. View of Responsible Officials and Corrective Action Plan - Chaldean American Ladies of Charity has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, CALC is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. CALC has corrected this administrative issue and is committed to maintaining compliance through ongoing audits.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 21.027, Barrier Removal and Employment Success Expansion Grant Federal Award Identification Number and Year: BRES 24-16 Finding Type – Material weakness in internal control over compliance Repeat Finding – No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 – During our testing over reporting, we noted instances in which there was no evidence of review and/or approval. Neither of the two quarterly reports selected for testing had no evidence of review or approval. Questioned Costs – None Cause/Effect – Client reported that they were not aware that they needed to keep records of proof of review. As a result, certain submitted reports could have been misstated. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports have proper evidence of review and approval. View of Responsible Officials and Corrective Action Plan – The Organization has corrected the findings and developed an approval process that time stamps and records proof of review and approval by CEO of all federal and state grant proposals and reports. Going forward, the Organization is ensuring all management has full awareness of all federal and state grant compliance procedures and controls, reviewing federal and state regulations at monthly Grants and Development Meetings to adjust accordingly. The Organization has corrected this administrative issue and is committed to maintaining compliance through ongoing audits.
Federal Agency: U.S. Department of Health and Human Services Assistance Listing Numbers: 93.623 Federal Program Titles: Basic Center Grant Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.303(a), non-federal entities must establish and maintain effective internal controls over federal awards. Furthermore, 2 CFR 200.403(g) requires that costs be adequately documented in order to be allowable under federal awards. Condition: During our testing of expenditures charged to the major program, we noted multiple instances that did not contain documented evidence of review or approval by a supervisor or program manager. Questioned Costs: None. Context: During our testing of ten expenditures charged to the major program, we noted three instances that did not contain documented evidence of review or approval by a supervisor or program manager. Although management stated that expenditures are reviewed before processing, no signatures, initials, timestamps, or electronic workflow logs were retained to demonstrate the review occurred. Effect: Failure to document review and approval increases the risk that unallowable or erroneous expenditures could be charged to the federal award and go undetected. Although no unallowable costs were identified in our testing, the control deficiency could lead to future noncompliance or questioned costs. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization enforce policies requiring all expenditures charged to federal programs to be reviewed and approved by an appropriate official, and document the approval through dated signatures, electronic approvals, or maintained audit trails in software utilized by the Organization. Views of Responsible Officials: Management agrees with the finding.
2024-001 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: SLFRP1447; 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 the one covered transaction tested, the County did not maintain documentation of verification that the vendor was not suspended or debarred prior to entering into the covered transaction. Questioned Costs: None. Context: The County entered into one covered transaction during the year using COVID-19 – Coronavirus State and Local Fiscal Recovery Funds. The vendor tested was not listed as suspended or debarred on SAM.gov at the time of the audit. 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 it is their practice to perform the SAM.gov search; however, the results of the suspension and debarment search were not retained for this vendor. 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: Concur
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2021 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The City submitted four P&E reports during the audit period; however, the internal controls in place were not effective to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The current period and cumulative expenditures reported consisted of the amounts expended by the beneficiaries who were awarded funds from the City, rather than total amounts expended to the beneficiaries, resulting in current period expenditures and cumulative expenditures being incorrectly reported on three of the four reports as follows: Quarterly Report: October 1, 2023 to December 31, 2023 Current period expenditures were overstated by $666,417. Cumulative expenditures were understated by $964,879. Quarterly Report: January 1, 2024 to March 31, 2024 Current period expenditures were overstated by $860,312. Cumulative expenditures were understated by $104,567. Quarterly Report: April 1, 2024 to June 30, 2024 Current period expenditures were overstated by $104,567. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, . . ." 2 CFR 200.1 states in part: ". . . Expenditures means charged made by a non-Federal entity to a project or program for which a Federal award was received. . . . (2) For reports prepared on a cash basis, expenditures are the sum of: (i) Cash disbursements for direct charges for property and services; (ii) The amount of indirect expense charged; (iii) The value of third-party in-kind contribution applied; and (iv) The amount of cash advance payments and payments made to subrecipients. . . ." Cause The City's oversight process for filing the P&E reports for the period of October 1, 2023 to September 30, 2024, did not detect errors in the P&E reports. The City's understanding was that the expenditures in its report should be based on when the beneficiaries expended the funds and not when the City disbursed the funds to the beneficiaries. The City officials did not understand the requirements until the prior audit was finished, which was after multiple of these reports had already been submitted. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the City did not report cumulative expenditures and current period expenditures properly when filing the P&E reports for periods from October 1, 2023 to September 30, 2024. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City develop policies and procedures to ensure the City provides the Treasury with complete and accurate information as it relates to the City in its P&E reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 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): FY2024 Compliance Requirement: Procurement and Suspension and Debarment 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 Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. A population of two covered transactions was identified, and both were selected for testing. The County had procedures in place to verify that the persons and entities related to each of the covered transactions were not suspended, debarred, or otherwise excluded; however, there was no review or approval process documented for us to verify that an internal control system was designed and operating properly. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Before the prior audit, the County had not designed or implemented policies and procedures to verify that contractors were not suspended or debarred or otherwise excluded from participating in federal programs. While these procedures were subsequently implemented, the individual who implemented the procedures was not aware of the requirement to document a review or approval process. Effect Without a proper system of internal controls in place, material noncompliance could have gone undetected. Material noncompliance with this requirement could have resulted in funds being disbursed to vendors who were suspended or debarred from receiving federal funds. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable and questioned costs, and the funding agency could potentially recover the funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls to ensure that the current procedures in place are properly implemented for all persons and entities that are paid $25,000 or more, all or in part with federal funds, to ensure they are not suspended, debarred, or otherwise excluded from participating in federal programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI080845 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure reimbursement requests are formally reviewed by someone who did not prepare the request to verify the correct information and data is submitted. Condition: The Organization submitted the financial report after the required due date and the performance report did not have evidence of review or approval. Questioned costs: None Context: During our testing, we identified the financial report was submitted after the required due date and the performance report did not have evidence of review or approval. Cause: The Organization did not submit financial report timely and performance report did not have evidence of control. Effect: The Organization did not meet the reporting requirements for submitting financial reports timely. Additionally, one performance report did not have evidence of a review performed. Repeat Finding: No Recommendation: We recommend the entity evaluate its procedures and implement an additional control to ensure reports are submitted timely and reviewed prior to submission.
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): ARP Act Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context During the audit period, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) totaling $5,647,762 were expended under the water, sewer, and broadband eligible use categories. All of the transactions were subject to suspension and debarment provisions. Prior to entering into subawards and covered transactions with the SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that entity, or adding a clause or condition to the covered transaction with that person. The City's policies related to suspension and debarment requirements included the Executive Secretary of the Engineering and Board of Works (Executive Secretary) verifying the SAMS exclusions. The City entered into one contract with one vendor for one project under the water, sewer, and broadband eligible use category during the audit period. Total payments made to the vendor during the audit period were $5,647,762, all of which were subject to suspension and debarment requirements. Per inquiry with the City, the Executive Secretary verified the vendor was not suspended or debarred by checking the SAMs exclusions; however, documentation of the verification was not retained. As such, we could not determine if the City complied with the suspension and debarment requirements. 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 A proper system of internal controls was not implemented by management of the City. Policies over suspension and debarment requirements were in place; however, the procedures did not address the retention of documentation. As such, the City was unable to provide documentation to demonstrate they checked SAM.gov to verify that the contractor was not suspended or debarred prior to payment. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable and the funding agency could potentially request repayment of funds previously provided to the City. Furthermore, noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls to ensure that all contractors paid $25,000 or more, all in or in part with federal funds, are not suspended, debarred, or otherwise excluded from participating in federal programs and ensure appropriate supporting documentation for federal programs is retained for audit. 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): ARP Act Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a city with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The City submitted all required P&E reports during the audit period. The internal controls in place were not effective and did not prevent, or detect and correct, errors in the P&E reports prior to submission. All four quarterly reports submitted contained errors; obligations and expenditures were understated by the following amounts: Current Current Period Cumulative Period Cumulative Obligation Obligation Expenditure Expenditure 2023 Q4 P&E Report $ 79,009 $ 89,009 $ 79,009 $ 89,009 2024 Q1 P&E Report 379,005 89,009 379,005 468,014 2024 Q2 P&E Report 1,331,499 79,009 1,331,499 468,014 2024 Q3 P&E Report 2,208,957 79,009 2,208,957 468,014 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 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information." 31 CFR 35.4(c) states: "During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary or her delegate, as applicable, may require for the administration of this section. In addition to regular reporting requirements, the Secretary may request other additional information as may be necessary or appropriate, including as may be necessary to prevent evasions of the requirements of this subpart. False statements or claims made to the Secretary may result in criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating in Federal awards or contracts, and/or any other remedy available by law." Cause The City's management did not have effective internal controls in place to ensure proper amounts were reported prior to submission. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are effective in preventing, or detecting and correcting, noncompliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria or specific requirement: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-Federal recipients and subrecipients must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance the award is in compliance with the Federal Statutes, regulations, and the terms and conditions of the Federal award. Condition: The City's Annual Reports were prepare and submitted by the same individual. The was no additional level of review before submitting. Questioned costs: No Context: The Annual Report is prepared and submitted by the same indivdual with no approver. Cause: The City did not have a control in place surrounding review of the Annual Report prior to submission. Effect: Lack of approval could result in misstatement of federal funds being submitted. Repeat Finding: No Recommendation: We recommend that the Annual Report be approved by someone other than preparer prior to submisson. View of responsible officials: There is no disagreement with the audit finding.
Finding 2024-004 Insufficient Documentation Supporting Eligibility Determination Type of Finding: Noncompliance and Significant Deficiency in Internal Control over Compliance Condition: The Organization uses a database to collect and store documentation related to eligibility determinations for program participants. While this tool was used consistently throughout the year, the audit identified a lack of documented review procedures to verify that eligibility criteria were appropriately assessed and that all required documentation was obtained and retained. There is no established process to review or confirm the completeness and accuracy of eligibility documentation within the database. As a result, three of the sixty transactions tested did not include sufficient documentation to support eligibility determinations, representing instances of noncompliance with the eligibility requirements under the federal program. Criteria: According to Uniform Guidance 2 CFR §200.303(a), the Organization is required to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, per the federal grant award document, the eligibility documentation files must be maintained until three years has elapsed from the las payment under the grant. Cause: The deficiency appears to stem from an underdeveloped system of internal control surrounding the eligibility determination process. Although the Organization adopted a digital solution to facilitate documentation, it did not implement corresponding review or monitoring controls to ensure compliance. In addition, the absence of documented policies or assigned responsibilities contributed to gaps in oversight and follow-through. Possible of Known Effect: Due to the lack of review procedures and internal control mechanisms, the Organization did not retain adequate documentation to support eligibility determinations in 3 out of 60 transactions tested. This resulted in known compliance findings under the eligibility requirements of the federal program. In the auditor’s judgment, the combination of the control deficiencies and noncompliant transactions indicates that the Organization did not have a system of internal control in place capable of providing reasonable assurance of compliance with federal eligibility requirements, as required under 2 CFR 200.303 and the applicable program-specific provisions. Questioned Costs: Known questioned costs of $270 were identified. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization enhance its internal control structure over eligibility determination by implementing a formal review process to verify that all required documentation is obtained, reviewed, and retained in the system. Responsibilities for eligibility review should be clearly assigned, and staff should be trained to ensure that documentation standards are consistently met. Periodic quality checks or file reviews may help reinforce compliance and identify any gaps before claims are submitted or services are rendered. Views of Responsible Officials: The Organization will transition to Pantry Soft, a new CRM to centralize client records, eligibility documentation and service dates. We will include mandatory eligibility fields and document upload requirements before service can be recorded. We will develop a standardized eligibility checklist to be completed for all new and returning participants. Staff will be trained on Pantry Soft usage, eligibility requirements and document retention stands.
Allowable Activities Type of Finding - Significant deficiency in internal control over compliance Program: Coronavirus Relief Fund Assistance Listing Number: 21.019 Federal Agency: U.S. Department of Treasury Criteria - In accordance with 2 CFR 200.303 subrecipients must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the subrecipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition - During compliance testing, it was identified that one expenditure in the sample selection was not allowable under the grant agreement. Cause - The expenditure had been reviewed, approved, and manually coded to the appropriate program, however the expenditure was entered into the accounting system under the wrong program. There was no comparison of the coding within the accounting system to the approved coding on the related support. Effect - Grant funds were allocated to an unallowed activity. Questioned Costs - $257. Context - Out of a sample of 21 expenditures totaling $266,209, one expenditure totaling $257 was determined to be an unallowed activity under the Coronavirus Relief Fund and related grant agreement. Identification as a repeat findings - This is not a repeat finding. Recommendation - We recommend management implement a periodic review of grant expenditures entered into the accounting system to ensure coding is consistent with approved programs. Views of responsible official - Management concurs with the finding. The Organization is working with its outsourced accounting firm to make the necessary changes or updates in processes and controls. See the corrective action plan.
Reporting Type of Finding - Noncompliance and material weakness in internal control over compliance Program: Coronavirus Relief Fund Assistance Listing Number: 21.019 Federal Agency: U.S. Department of Treasury Criteria - In accordance with 2 CFR 200.303 subrecipients must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the subrecipient is managing the federal award in compliance and federal statutes, regulations and the terms and conditions of the federal award. In accordance with 2 CFR 200.329 subrecipients must submit performance reports as required by the federal award. Reports submitted semiannually are due no later than 30 calendar days after the reporting period. Condition - Total expenditures reported on the semiannual reports due April 30, 2024 and October 31, 2024 did not agree to related support. The semiannual report due on October 31, 2024 was not submitted timely. Cause - The reports were prepared on a cash basis and the reports were not being monitored for timely submission. Effect - The Association submitted reports that were not on the accrual basis which caused expenditures to be reported in the incorrect period and submitted one report untimely. Questioned costs - No questioned costs. Context - The Association is required to report to the City of Topeka, Kansas semiannually. We tested both reports due during 2024. The report due April 30, 2024 covered the period October 1, 2023 through March 31, 2024 and reported cash expenditures of $19,675. Internal records of the Organization supported accrual expenditures of $29,678 during the same time period. Expenditures were under-reported by $10,003 on the report due April 30, 2024. The report due October 30, 2024 covered the period April 1, 2024 through September 30, 2024 and reported cash expenditures of $60,902. Internal records of the Organization supported accrual expenditures of $54,726 during the same time period. Expenditures were over-reported by $6,176 on the report due October 30, 2024. This same report was submitted February 25, 2025 when the due date was October 30, 2024. Identification as a repeat finding - This is a repeat finding. See 2023-002. Recommendation - We recommend that management review reporting requirements and internal procedures to ensure expenses are reported accurately, completely, and timely using an accrual basis. There should be a review of the reports prior to submission that includes a comparison to internal accrual-based records and monitoring to ensure the reports are submitted timely. Views of responsible official - Management concurs with the finding. The Organization is reviewing its reporting procedures and providing education on requirements to those involved. See the corrective action plan.
FINDING 2024-002 Subject: Medicaid Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): 100288480A Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context The Township had not properly designed or implemented a system of internal controls which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, material noncompliance related to expenditures made from the Medicaid Cluster. The Medicaid Cluster consists of three federal programs. However, the Township received funding from only one program, the Medical Assistance Program. The Medical Assistance Program grant funding is provided by the Indiana Family and Social Services Administration to Freestanding Governmental Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal ambulance payment adjustment, the amount received by the Township. The Township utilized its Fire Fighting Fund to account for both fire and ambulance services. Costs were allocated between fire and ambulance services as necessary. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. The funding received during the audit period was based on expenditures and data from January 1, 2021 through December 31, 2021, and, as such, internal controls for that period were reviewed. The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm using information provided by the Township. The Township provided expenditure data, reports detailing run data, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared and submitted the report. The Township did not participate in the preparation or submission process, nor complete a review of the report prior to submission. As such, the Township could not ensure that the information provided was properly utilized or that the report was accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." The Indiana State Board of Accounts (SBOA) is required under Indiana Code 5-11-1-27(e) to define the acceptable minimum level of internal control standards. To provide clarifying guidance, the State Examiner compiled the standards contained in the manual, Uniform Internal Control Standards for Indiana Political Subdivisions. All political subdivisions subject to audit by SBOA are expected to adhere to these standards. The standards include adequate control activities. According to this manual: "Control activities are the actions and tools established through policies and procedures that help to detect, prevent, or reduce the identified risks that interfere with the achievement of objectives. Detection activities are designed to identify unfavorable events in a timely manner whereas prevention activities are designed to deter the occurrence of an unfavorable event. Examples of these activities include reconciliations, authorizations, approval processes, performance reviews, and verification processes. An integral part of the control activity component is segregation of duties. . . . There is an expectation of segregation of duties. If compensating controls are necessary, documentation should exist to identify both the areas where segregation of duties are not feasible or practical and the compensating controls implemented to mitigate the risk. . . ." Cause A proper system of internal controls over the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Reporting compliance requirements for the Medicaid Cluster expenditures was not designed by management of the Township, which would include segregation of key functions to ensure Medicaid Cluster funds were being used appropriately. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Township's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Township first became aware of this internal control deficiency during the 2022 audit; however, since the expenditure reimbursements by the awarding agency are on a three-year cycle, the reimbursements received in 2024 were for submissions made for 2021 reporting. During 2021, the Township was unaware of the lack of internal controls. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Township's management design and implement a proper system of internal controls including policies and procedures that would include segregation of duties for the preparation and approval of expenditure reports to ensure the accuracy of such reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Program, Assistance Listing # and Year, Federal Agency, Pass-Through Entity: Choice Neighborhoods Implementation Grants, Assistance Listing #14.889, 2024, U.S. Department of Housing and Urban Development, Office of Community Planning and Development. COVID-19 - Coronavirus State and Local Fiscal Recovery Fund, Assistance Listing #21.027, 2021, U.S. Department of Treasury. Criteria or Specific Requirement: 2 CFR 200.303 requires the entity to establish and maintain effective internal controls over compliance with respect to federal awards and Section 1111(b)(2)(A) of the ESEA for compliance accountability. Proper internal controls require supporting documentation to be retained as evidence for effectiveness of the controls in place. Also, 2 CFR 180 prohibits non-Federal entities from entering into covered transactions with suspended or debarred entities.’t t Condition: The City failed to establish and maintain effective controls over suspension and debarment. The City failed to provide evidence the City verified vendor’s suspension and debarment status prior to procurement. Effect: The City of Shreveport risks not being in compliance with their federal funding procurement compliance requirements. Cause: Purchasing Department/Management failed to follow City Procurement Policy and Procedure when contracting vendors. Questioned Costs: Not applicable Context: The issue was identified in a sample of 25 disbursements for each major program. Recommendation: We recommend the City follows their Procurement Policy when ensuring vendor status prior to contracting services. Views of responsible officials and corrective action plan: The City will strengthen the controls over the vendor debarment and suspension status review during the procurement process with the following steps: (1) the Finance Purchasing Division will communicate with the City Departments receiving federal awards to ensure the contracts are routed through Purchasing for verification of debarment and suspension compliance; (2) the Finance Purchasing Division will run a contract audit report periodically to review the Department contract documents for compliance; and (3) throughout the year, the Finance Department will review the grant expenditures for vendor activity not meeting requirements.
Federal Program, Assistance Listing # and Year, Federal Agency, Pass-Through Entity: Choice Neighborhoods Implementation Grants, Assistance Listing #14.889, 2024, U.S. Department of Housing and Urban Development, Office of Community Planning and Development. COVID-19 - Coronavirus State and Local Fiscal Recovery Fund, Assistance Listing #21.027, 2021, U.S. Department of Treasury. Criteria or Specific Requirement: 2 CFR 200.303 requires the entity to establish and maintain effective internal controls over compliance with respect to federal awards and Section 1111(b)(2)(A) of the ESEA for compliance accountability. Proper internal controls require supporting documentation to be retained as evidence for effectiveness of the controls in place. Also, 2 CFR 180 prohibits non-Federal entities from entering into covered transactions with suspended or debarred entities.’t t Condition: The City failed to establish and maintain effective controls over suspension and debarment. The City failed to provide evidence the City verified vendor’s suspension and debarment status prior to procurement. Effect: The City of Shreveport risks not being in compliance with their federal funding procurement compliance requirements. Cause: Purchasing Department/Management failed to follow City Procurement Policy and Procedure when contracting vendors. Questioned Costs: Not applicable Context: The issue was identified in a sample of 25 disbursements for each major program. Recommendation: We recommend the City follows their Procurement Policy when ensuring vendor status prior to contracting services. Views of responsible officials and corrective action plan: The City will strengthen the controls over the vendor debarment and suspension status review during the procurement process with the following steps: (1) the Finance Purchasing Division will communicate with the City Departments receiving federal awards to ensure the contracts are routed through Purchasing for verification of debarment and suspension compliance; (2) the Finance Purchasing Division will run a contract audit report periodically to review the Department contract documents for compliance; and (3) throughout the year, the Finance Department will review the grant expenditures for vendor activity not meeting requirements.
Federal Program, Assistance Listing # and Year, Federal Agency, Pass-Through Entity: COVID-19 - Coronavirus State & Local Fiscal Recovery Fund, Assistance Listing #21.027, 2021, U.S. Department of Treasury. Criteria or Specific Requirement: In accordance with 2 CFR 200.1, all recipients of federal funds must complete and submit annual project and expenditure reports on all SLFRF funded projects. Also, 2 CFR 200.303 requires the entity to establish and maintain effective internal controls over compliance with respect to federal awards and Section 1111(b)(2)(A) of the ESEA for compliance accountability. Proper internal controls require supporting documentation to be retained as evidence for effectiveness of the controls in place. In accordance with 2 CFR.307, program income earned during the period of performance must be used in accordance with the terms and conditions of the federal award. Condition: During our testing, CRI identified a lack of internal controls related to reviewing and approving report submissions. During our testing, CRI identified 2024 report submissions did not agree to cumulativeto- date expenditures of the fiscal years 2021-2024. During our testing, CRI identified revenue recognized/earned during the period was improperly reported as program income and expenditures were improperly included as program income expenditures, causing inaccurate reporting. Program income was materially overstated. Effect: The City of Shreveport risks reports required to be submitted to the U.S. Department of the Treasury to be materially misstated. Cause: A lack of adequate controls over reporting requirements. Questioned Costs: Not applicable Context: The issue was identified while testing the population of reports. Recommendation: We recommend the City implements proper controls to review reports submitted, so as to identify and address any discrepancies. Views of responsible officials and corrective action plan: Accounting has reviewed all projects and Ordinances related to ARPA and has updated reports and records to fully account for ARPA funding. From the Chief Administrative Officer (CAO) and the department responsible for a specific project that has multiple funding sources, confirmation was obtained on what amounts were obligated ARPA funds. This strengthens the controls over the report submission process to ensure the reported amounts are accurate and reconciled properly.
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): 2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. An internal control system was not in place at the City to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. A population of nine covered transactions that equaled or exceeded $25,000 paid from SLFRF award funds received from the U.S. Department of the Treasury was identified. Three covered transactions were selected for testing. The City had procedures in place to verify that the persons and entities related to each of the three covered transactions were not suspended, debarred, or otherwise excluded; however, one person was responsible for verifying compliance, without an oversight, review, or approval process in place. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The City's procedures to verify vendors' suspension or debarment status were not adequate, as only one employee was involved in this process, with no oversight. City officials were not aware that a second review was necessary for suspension and debarment requirements. Effect Without the proper design or implementation of internal controls, the City cannot ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover the funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls to ensure that the current procedures in place are properly implemented for all persons and entities that are paid $25,000 or more, all or in part with federal funds, to ensure they are not suspended, debarred, or otherwise excluded from participating in federal programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 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): SWIF224703 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have adequate policies or procedures in place for verifying that an entity with which it planned to enter into a covered transaction is not suspended, debarred, or otherwise excluded. A population of one covered transaction, totaling $450,688, that equaled or exceeded $25,000 paid from SLFRF funds received from the Indiana Finance Authority was identified and selected for testing. The City did not verify the vendor's suspension or debarment status prior to payment due to the City's lack of internal controls over the compliance requirement. One person was responsible for verifying compliance without an oversight, review, or approval process in place. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City's procedures to verify vendors' suspension or debarment status were not adequate as only one employee was involved in this process with no oversight. City officials involved in this project were not aware of this compliance requirement for this grant. Effect Without the proper design or implementation of internal controls, the City cannot ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover the funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls to ensure that the current procedures in place are properly implemented for all persons and entities that are paid $25,000 or more, all or in part with federal funds, to ensure they are not suspended, debarred, or otherwise excluded from participating in federal programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs Assistance Listings Number: 20.106 Federal Award Number and Year (or Other Identifying Number): 3-18-0047-033-2024 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context Detailed property records are to be maintained when equipment having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds $5,000 is purchased with federal awards. The property records should contain the equipment description (including serial number or other identification number), source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. One piece of equipment was purchased with Airport Improvement Program funds totaling $216,250. However, the equipment was not included in the Authority's property records (capital asset listing), nor did the records contain all the required information listed above. In addition, the Authority did not perform a complete physical inventory within the last two years as required. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause Internal controls were not designed to ensure compliance with equipment management requirements as the Authority was unaware of the procedures needed. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the Authority. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Authority's management strengthen its system of internal controls to ensure compliance with equipment management requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funding. As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year, April 1 through March 31, and must be submitted to the Treasury by April 30 each year. The City submitted one P&E report during the audit period. The internal controls in place were not effective and did not prevent, or detect and correct, errors in the P&E report prior to submission. As a result, the Current Period Obligation and Current Period Expenditure amounts for Project Identification Numbers 0022.0000 and 0.24 were each overstated by $298,172 and $1,490,414, respectively. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF PORTAGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The City's management did not have effective internal controls in place to ensure proper amounts were reported prior to submission. The City had established Project Identification Numbers based on the City's calendar year expense amounts. However, the City's calendar year, January 1 to December 31, differed from the P&E annual report calendar year, April 1 through March 31. This resulted in Project Identification Number 0022.0000 Current Period Obligation and Current Period Expenditures not to be reduced to zero and Project Identification Number 0.24 Current Period Obligation and Current Period Expenditures amounts to include $1,490,414 of January 1 through March 31, 2023, expenditures that were outside the P&E annual report that was due April 30, 2024, parameters. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are effective in preventing, or detecting and correcting, noncompliance. 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 Significant deficiency in internal control over compliance with allowable costs meeting the requirements of 2 CFR Part 200. Federal Agency: U.S. Department of Commerce Program Title: Economic Adjustment Assistance Program Assistance Listing Number: 11.307 Award Number: MDM9F73QJ1Z1 Criteria Organization policy and Uniform Guidance (2 CFR 200.303) require that all nonpayroll disbursements be supported by documented approval from an authorized official prior to payment to ensure proper internal control over federal funds. Condition/Context During our testing of 21 nonpayroll disbursements, we noted that 9 disbursements lacked evidence of the required approval by an authorized official. Cause During the year, the Organization implemented a new financial system. As a result of the system change, all supporting data for nonpayroll disbursements was lost prior to the conversion and could not be recovered or reconstructed. Effect Failure to document approvals increases the risk of unauthorized or improper disbursements and noncompliance with internal control policies, which could result in questioned costs or loss of federal funding Questioned Costs None identified. Recommendation We recommend the Organization reinforce its procedures and implement controls to ensure that supporting documentation is retained and properly migrated during system changes, and that all nonpayroll disbursements are properly approved and documented in accordance with policy and federal requirements Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.303(a) which provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Board of Health has established procedures to approve timesheets by requiring the employee and department supervisor to sign the timesheets. For 2024, the Board of Health failed to approve 11% and 8% of payroll disbursements tested over the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the Epidemiology and Laboratory Capacity for Infectious Diseases federal programs, respectively. Failure to follow the approved procedures could result in the occurrence of unallowable payroll transactions. The Board of Health should ensure that both the employee and department supervisor sign the timesheets. These approvals should be maintained for audit.
2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.303(a) which provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Board of Health has established procedures to approve timesheets by requiring the employee and department supervisor to sign the timesheets. For 2024, the Board of Health failed to approve 11% and 8% of payroll disbursements tested over the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the Epidemiology and Laboratory Capacity for Infectious Diseases federal programs, respectively. Failure to follow the approved procedures could result in the occurrence of unallowable payroll transactions. The Board of Health should ensure that both the employee and department supervisor sign the timesheets. These approvals should be maintained for audit.
2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 C.F.R § 200.303(a) which provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR § 246.7(c) states to qualify for the program, infants, children, and pregnant, postpartum, and breastfeeding women must: (i)Reside within the jurisdiction of the State (except for Indian State agencies). Indian State agencies may establish a similar requirement. All State agencies may determine a service area for any local agency, and may require that an applicant reside within the service area. However, the State agency may not use length of residency as an eligibility requirement. (ii) Meet the income criteria specified in paragraph (d) of this section. (iii) Meet the nutritional risk criteria specified in paragraph (e) of this section. 7 CFR § 246.7(d) states the State agency shall establish, and provide local agencies with, income guidelines, definitions, and procedures to be used in determining an applicant's income eligibility for the Program. 7 CFR § 246.7(d)(1) states the State agency may prescribe income guidelines either equaling the income guidelines established under section 9 of the National School Lunch Act for reduced-price school meals or identical to State or local guidelines for free or reduced-price health care. However, in conforming Program income guidelines to health care guidelines, the State agency shall not establish Program guidelines which exceed the guidelines for reduced-price school meals or are less than 100 percent of the revised poverty income guidelines issued annually by the Department of Health and Human Services. Program applicants who meet the requirements established by paragraph (d)(2)(vi)(A) of this section shall not be subject to the income limits established by State agencies under this paragraph. Due to the lack of controls over the eligibility application process, of the eligibility applications tested for fiscal year 2024, 6.7% were not signed by the applicant or WIC personnel to indicate review of application and agreement with the eligibility determination nor did they contain the information necessary to determine WIC income-based eligibility, including household size or indication of the measurement period of paycheck stubs presented during the application appointment (monthly, bi-weekly, twice a month, weekly). Lack of controls in place by reviewing and signing applications could result in benefits provided to ineligible participants. The Board of Health WIC personnel should implement additional control practices for the review and approval for WIC eligibility for participants. In addition, WIC personnel ensure all supporting documentation has been obtained in order to determine participant eligibility.
2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 C.F.R § 200.303(a) which provides that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR § 246.7(c) states to qualify for the program, infants, children, and pregnant, postpartum, and breastfeeding women must: (i)Reside within the jurisdiction of the State (except for Indian State agencies). Indian State agencies may establish a similar requirement. All State agencies may determine a service area for any local agency, and may require that an applicant reside within the service area. However, the State agency may not use length of residency as an eligibility requirement. (ii) Meet the income criteria specified in paragraph (d) of this section. (iii) Meet the nutritional risk criteria specified in paragraph (e) of this section. 7 CFR § 246.7(d) states the State agency shall establish, and provide local agencies with, income guidelines, definitions, and procedures to be used in determining an applicant's income eligibility for the Program. 7 CFR § 246.7(d)(1) states the State agency may prescribe income guidelines either equaling the income guidelines established under section 9 of the National School Lunch Act for reduced-price school meals or identical to State or local guidelines for free or reduced-price health care. However, in conforming Program income guidelines to health care guidelines, the State agency shall not establish Program guidelines which exceed the guidelines for reduced-price school meals or are less than 100 percent of the revised poverty income guidelines issued annually by the Department of Health and Human Services. Program applicants who meet the requirements established by paragraph (d)(2)(vi)(A) of this section shall not be subject to the income limits established by State agencies under this paragraph. Due to the lack of controls over the eligibility application process, of the eligibility applications tested for fiscal year 2024, 6.7% were not signed by the applicant or WIC personnel to indicate review of application and agreement with the eligibility determination nor did they contain the information necessary to determine WIC income-based eligibility, including household size or indication of the measurement period of paycheck stubs presented during the application appointment (monthly, bi-weekly, twice a month, weekly). Lack of controls in place by reviewing and signing applications could result in benefits provided to ineligible participants. The Board of Health WIC personnel should implement additional control practices for the review and approval for WIC eligibility for participants. In addition, WIC personnel ensure all supporting documentation has been obtained in order to determine participant eligibility.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 1, 2024 • Pass-through entity – State of Georgia Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, 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; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (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; (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $917,218 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed as the entire population of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $917,218 of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
Internal control deficiency and noncompliance over cash management related to advance payments. Identification of the federal program: Assistance Listing Number 84.116Z: • Fund for the Improvement of Postsecondary Education • U.S. Department of Education • Federal award identification number – P116Z230323 • Federal award year – June 1, 2023 to May 31, 2026 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.305(b) Federal payment. (b) Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.305(b) Federal payment. (b) (1) Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: During our testing over cash management, we observed management used the advance method for cash management; however, the entity did not minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. Management submitted and received an advance method payment for the full amount of the federal award in June of 2024. However, there were expenditures incurred between July and December 2024 which were incurred after the advance method payment was completed. Therefore, management did not implement procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. Cause: Management did not have internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above. Effect or potential effect: Advance payments were not supported by internal controls and management did not minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. This can potentially result in interest earned on Federal funds. Questioned costs: $981,704 – Assistance Listing Number 84.116Z – Federal award identification number – P116Z230323 Questioned costs were computed as the expenditures incurred between July and December 2024 which were after the advance method payment was completed in June 2024. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over cash management, we observed management submitted and received an advance method payment for the full amount of the federal award in June of 2024. However, there were $981,704 expenditures incurred between July and December 2024 which were incurred after the advance method payment was completed. Therefore, management did not implement procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. We were unable to quantify the interest earned on Federal funds. Identification as a repeat finding, if applicable: No. Recommendation: Management should develop and implement internal controls over advance method payments to ensure the entity minimizes the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity or switch to the reimbursement method. Management should review the advance method payment identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: The Company acknowledges non-compliance with 2 CFR § 200.305 that the entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury or the pass-through entity and the disbursement of funds by the recipient or subrecipient. However, the questioned costs that were transferred in advance were ultimately deemed reasonable because they were disbursed during the grant period for allowable costs as part of the federal contract awarded. The Company will ensure a proper understanding of the compliance requirements for all federal contracts prior to requesting funds and will ensure funds transferred are compliant with the requirement that the Company minimize the time elapsed from the time of transfer and the disbursement of funds in accordance with the grant terms.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 84.116Z: • Fund for the Improvement of Postsecondary Education • U.S. Department of Education • Federal award identification number – P116Z230323 • Federal award year – June 1, 2023 to May 31, 2026 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (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; (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $153,169 – Assistance Listing Number 84.116Z – Federal award identification number – P116Z230323 Questioned costs were computed as the entire population of procurement transactions subject to small purchase and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $153,169 of procurement transactions subject to small purchase and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
U.S. Department of the Treasury Passed Through the Nevada Housing Division, City of Reno COVID‐19: Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing #21.027 Reporting Significant Deficiency in Internal Control Over Compliance Grant Award Number: SLFRP0309, SLFRP2634. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control 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: There was no evidence of review and approval (segregation of duties) between the preparer and reviewer of the quarterly financial reports and inaccurate information was reported to the federal awarding agency. Cause: The Foundation did not have internal controls to ensure proper review and approval (segregation of duties) between the preparer and reviewer of the quarterly financial reports. Effect: Inaccurate information could be reported to the federal awarding agency. Questioned Costs: None noted. Context/sampling: Two quarterly financial reports out of a population of four was selected for testing. Report Finding from Prior Year: Yes, 2023-004 Recommendation: We recommend the Foundation enhance the internal controls to ensure quarterly financial reports are reviewed and approved and accurate information is included in the reports. Views of Responsible Officials: The Foundation agrees with this finding; see corrective action plan.
U.S. Department of the Treasury Passed Through the Nevada Housing Division, City of Reno COVID‐19: Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing #21.027 Reporting Significant Deficiency in Internal Control Over Compliance Grant Award Number: SLFRP0309, SLFRP2634. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control 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: There was no evidence of review and approval (segregation of duties) between the preparer and reviewer of the quarterly financial reports and inaccurate information was reported to the federal awarding agency. Cause: The Foundation did not have internal controls to ensure proper review and approval (segregation of duties) between the preparer and reviewer of the quarterly financial reports. Effect: Inaccurate information could be reported to the federal awarding agency. Questioned Costs: None noted. Context/sampling: Two quarterly financial reports out of a population of four was selected for testing. Report Finding from Prior Year: Yes, 2023-004 Recommendation: We recommend the Foundation enhance the internal controls to ensure quarterly financial reports are reviewed and approved and accurate information is included in the reports. Views of Responsible Officials: The Foundation agrees with this finding; see corrective action plan.
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): Account ID 20-1982-0-1-806 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 GIBSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County elected to receive the standard revenue loss allowance, allowing it to claim a total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $6,537,866 as revenue loss to use for government services. As such, all SLFRF program funds expended from January 1, 2024 to December 31, 2024, were 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 as there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the Treasury. The reporting periods, as well as the respective due dates, are based on the type of recipient and the recipient's population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County submitted the required annual P&E reports during the audit period, which were obtained from the County Auditor's office. Although one employee prepared the P&E report and another reviewed the entries, the system of internal controls was not effective in preventing, detecting and correcting, errors. The data submitted included amounts which were not supported by the County's records. Errors identified included the following: • The 2024 Annual P&E report current expenditures were overstated by $170,815. • The 2024 Annual P&E report current obligations were overstated by $170,815. • The 2024 Annual P&E report cumulative obligations were overstated by $101,490. • The 2024 Annual P&E report cumulative expenditures were overstated by $99,325. The County did not adequately track expenditures annually as required, despite the P&E report breaking down expenditures by project, which would have allowed for accurate tracking. Instead, the County's ledger did not have adjustments or corrections that were included in the P&E report, resulting in the inability to verify the accuracy of the annual report filed during the audit period. The lack of effective internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 14 GIBSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The Deputy County Auditor reported that, due to persistent error messages in the submission system, the financial figures were modified to enable successful submission. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements, by reporting erroneous data, increases the likelihood that the public and the Treasury will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the County establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight take place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: Airport Improvement Program - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Airport Improvement Program Assistance Listings Number: 20.106 Federal Award Number and Year (or Other Identifying Number): AIP 3-18-0059-040-2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 DELAWARE COUNTY AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Authority had not properly designed a system of internal controls in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with the Airport Improvement Program grant award to ensure adequate safeguards are in place to prevent loss or damage of items. The Authority used federal funds to purchase a snow broom costing $300,551. The equipment was included in the capital asset listing of the Authority; however, it did not include the proper identifying information. The Authority's capital asset listing did not include the following required information: The use and condition of the property. The percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. INDIANA STATE BOARD OF ACCOUNTS 14 DELAWARE COUNTY AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The Authority was unaware of the requirements to track the percentage of federal participation in the project costs for the federal award under which the property was acquired and the use and condition of the property. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, capital assets purchased with federal dollars were not properly added to the Authority's capital asset listing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Authority. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Authority establish a proper system of internal controls and develop policies and procedures to ensure capital asset records include all the necessary information. We also recommended the Authority ensure they have a proper understanding of all grant requirements. 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 - 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): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the City to ensure compliance with the requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such beneficiaries 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 certification from that person, or adding a clause or condition to the covered transaction with that person. Two vendors were selected for testing that equaled or exceeded $25,000 paid from SLFRF funds during the audit period was identified, totaling $166,579. For one of the two vendors, the City did not verify the suspension and debarment status prior to payment. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF MARION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the ELPS; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The City did not obtain evidence of one vendor's verification for suspension and debarment, since it is up to the individual departments to complete that verification. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. As a result, adequate documentation was not retained for suspension and debarment. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF MARION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure all required documentation related to suspension and debarment is maintained. We also recommended that the City perform suspension and debarment procedures on all vendors with purchases above $25,000 and ensure that documentation is maintained to show the verification was performed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a city with a population below 250,000 residents that was allocated less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds funding. As such, the P&E report, covering the period April 1, 2023 to March 31, 2024, was required to be submitted to the Treasury by April 30, 2024. The subsequent annual reports are to cover one year from April 1 to March 31 and must be submitted to the Treasury by April 30 of each year. The City submitted the P&E report by April 30, 2024, as required, and there was more than one employee involved in the process of submission; however, internal controls were not effective to prevent, or detect and correct, errors. The data submitted included amounts that were not supported by the City's records and amounts that should not have been included. Errors identified included the following: Total Cumulative Obligations were overstated by $452,808. Current Period Obligations were overstated by $1,819,927. Current Period Expenditures and Total Cumulative Expenditures were overstated by $1,400,000. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF MARION 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). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds . . ." Cause The City included the total amount appropriated to each of the projects that were overstated on the report and did not only include the amounts that were obligated as of the end date of the report. Also, the City included transfers to other funds in cumulative and current expenditures, but the funds were not expended as of the end of the report date. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the City did not accurately report current period obligations and cumulative obligations when filing the P&E report for the period April 1, 2023 to March 31, 2024. Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF MARION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight of federal reports are taking place. We also recommended the development of policies and procedures to ensure the City provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
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): 2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF ATTICA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Nonfederal entities and contractors are subject to nonprocurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in federal assistance programs or activities. Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods or services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the U.S. Department of the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to covered transactions. The City had not designed or implemented adequate policies and procedures to ensure that applicable vendors and contractors (vendors) who received federal funds in excess of $25,000 were not suspended or debarred from participating in federal award programs. Covered transactions in the amount of $661,128 were made during the audit period to four vendors. There was no evidence of a verification that any of these vendors were not suspended or debarred. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF ATTICA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not have policies and procedures in place to verify that vendors were not suspended or debarred prior to entering into any covered transactions. The Clerk-Treasurer indicated that the City relied on its engineering firm to verify suspension and debarment status of vendors; however, documentation of verification was not provided to or verified by the City. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance could have led to contracting with vendors who were suspended or debarred from receiving federal grant funds. Additionally, noncompliance with the grant agreement and the compliance requirement could have resulted in the loss of future federal funds to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended the City's management strengthen its system of internal controls and adopt required procurement policies, which would include procedures for verifying vendors' suspension and debarment status prior to entering into the transaction and/or contract if the single or aggregate transactions are expected to exceed $25,000 per fiscal year. 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 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 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 WABASH COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon the type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted the P&E report that covered the period from April 1, 2023 to March 31, 2024, by April 30, 2024, as required; however, there was no evidence provided for audit to support there was a review or oversight process implemented to prevent, or detect and correct, errors on the prepared and submitted P&E report. As a result, the submitted P&E report included the following errors: The total cumulative expenditures of the entire program up to the report date of March 31, 2024, were reported as $2,028,663, which was underreported by $574,410; the actual total cumulative expenditures to be reported were identified as $2,603,073. The total cumulative obligations of the entire program up to the report date of March 31, 2024, were reported as $6,020,610, which was overreported by $1,604,688; the actual total cumulative obligations to be reported were identified as $4,415,922. 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). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." INDIANA STATE BOARD OF ACCOUNTS 14 WABASH COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary . . . periodic reports providing detailed accounting of the uses of funds . . ." Cause A proper system of internal controls, including policies and procedures, was designed but not implemented by management of the County to prevent and detect errors on the P&E report prior to submission. The County reported amounts for total cumulative expenditures and total cumulative obligations that did not agree with the County's records. The report submitted was not reviewed by a second person to identify this error prior to submission. Effect Without the proper implementation of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the County reported amounts for total cumulative expenditures and total cumulative obligations that did not agree with the County's records when filing the P&E report for the period April 1, 2023 to March 31, 2024. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight of federal reports are taking place. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 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): IN0184 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. The City did not have any policies or procedures in place related to the SLFRF suspension and debarment requirements. A population of three covered transactions totaling $2,056,140 that equaled or exceeded $25,000 paid from SLFRF funds were identified. All three covered transactions were selected for testing. For each of the three transactions, the City did not verify the vendors' suspension, debarment, or otherwise excluded from receiving federal funds prior to payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 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 The City had initially started checking vendors for suspension and debarment in years prior, but the official had heard somewhere it wasn't required and, therefore, stopped checking the System for Award Management (SAM) Excluded Parties List System (EPLS). They did not include the language in any of the covered transactions or obtain a certification. Therefore, the City was unable to provide documentation to demonstrate they had properly verified that contractors were neither suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a system of internal controls to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into contracts. Views of Responsible Officials For views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): IN0184 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The City submitted one P&E report during the audit period; however, the report was submitted without a documented review or oversight process in place to prevent, or detect and correct, errors. As a result, errors in reporting were identified. For one of the projects within the report, one claim included in the current period and cumulative expenditures was paid after the period covered (April 1, 2023 to March 31, 2024) by this report. This caused the current period and the cumulative expenditures to be overstated in the amount of $18,860. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause A proper system of internal controls over the P&E report was not implemented by the management of the City to ensure that complete and accurate information related to the SLFRF awards was provided to the Treasury. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, errors, as identified in the Condition and Context, occurred, and inaccurate information was provided to the Treasury. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls that would provide for segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City abstracts and reports on the correct time frame for each report submitted to provide the Treasury with complete and accurate information. 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): CY 2024 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 2023-001. Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon the type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contract for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funding. As such, the initial P&E report, covering three calendar quarters from March 3, 2021 to December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent quarterly reports are to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. INDIANA STATE BOARD OF ACCOUNTS 16 HOWARD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) One employee at the County prepared the quarterly reports, and the County Auditor reviewed the reports; however, the internal control was not effective and did not detect and allow correction of material misstatements prior to submission. Two of the four quarterly reports submitted during the audit period were selected for testing. For the two reports tested, all activity for the reporting period was not included, information submitted was not supported by the County's records, and the reports were not fairly presented. The errors identified on the quarterly reports included the following: Quarter 4 Project and Expenditure Report (October 1, 2023 to December 31, 2023) Total Cumulative Obligations were understated by $331,303 Total Cumulative Expenditures were understated by $331,303 Current Period Obligations were understated by $155 Current Period Expenditures were understated by $20,856 Quarter 3 Project and Expenditure Report (July 1, 2024 to September 30, 2024) Total Cumulative Obligations were overstated by $15,138 Total Cumulative Expenditures were understated by $15,118 Current Period Obligations were understated by $294,973 Current Period Expenditures were understated by $9,685 The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 17 HOWARD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause 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. The errors were due to all expenditures not being included in the reports and report entry errors such as typos. These errors were due to not all expenditures being included in the P&E reports ran for the time frame and not having a correct understanding of what was to be included in the reports. Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the County could not ensure that the reports submitted were accurate. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures, to ensure that the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 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): 2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. One covered transaction totaling $1,003,538 paid with SLFRF grant funds was identified during the audit period. The identified transaction was examined to determine if the County verified the suspension and debarment status of the vendor prior to payment. Upon review, the County had not performed procedures to ensure the vendor was not suspended or debarred, or otherwise excluded or disqualified, from participation in federal assistance programs or activities at any time during the audit period. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The management of the County did not develop a system of internal controls to ensure that policies and procedures were in place and followed, related to suspension and debarment. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the vendor paid was eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County establish a system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 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): SWIF 221154-TEMPUR WATER Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods or services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the U.S. Department of 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. Covered transactions in the amount of $3,600,147 were made during the audit period to two vendors. For one of the two vendors, the County did not check the ELPS, collect a certification from the vendor, or add a clause in a contract with the vendor. Although the County established Ordinance 2023-11 dated August 14, 2023, requiring all public works contracts to contain a suspension and debarment clause, the contract with the vendor was entered into prior to the establishment of the ordinance. The contract was not amended nor was one of the other two methods for verification of the suspension and debarment status of the vendor performed. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.214 states: "Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards." 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 A new policy was adopted to ensure compliance with suspension and debarment requirements after the County's 2023 audit. The new policy was not implemented for all applicable contracts entered into prior to the policy's enactment, and the alternative methods of verification were not performed to ensure compliance with suspension and debarment requirements. Effect Without proper implementation of an effectively designed system of internal controls, the County was unable to verify whether contractors and subrecipients were not suspended, debarred, or excluded. 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. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls to ensure that the current policy in place was properly implemented for all beneficiaries that are paid $25,000 or more, all or in part with federal funds, to ensure they are not suspended, debarred, or otherwise excluded from participating in federal programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP0752 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 2023-002. Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - State and Local Fiscal Recovery Funds (SLFRF). As such, the P&E report, covering the period from April 1, 2023 to March 31, 2024, was required to be submitted to the Treasury by April 30, 2024. The County submitted the P&E report by April 30, 2024, as required. Although one employee prepared the P&E report and another reviewed the entries, the system of internal controls was not effective in preventing, or detecting and correcting, errors. The County omitted expenditures that should have been reported and conversely reported expenditures that were erroneously charged to the grant fund but later moved to the correct fund. Additionally, the County reported obligations that were based on amounts budgeted for planned projects. Obligations are defined by a commitment to expend funds based on entering into contracts, subawards, or similar transactions that require payment. An allocation of funds in a budget or an intention to enter into a contract does not constitute an obligation. The errors identified included the following: Current obligations were understated by $1,723,673. Current expenditures were overstated by $29,960. Cumulative obligations were overstated by $1,385,504. Cumulative expenditures were understated by $12,000. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." Cause Although a system of internal controls over the P&E report which included segregation of duties was designed by management, it did not ensure that the County provided the Treasury with complete and accurate information related to the SLFRF awards. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the P&E report submitted to the Treasury misstated obligations and expenditures. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the County establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight take place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Internal Controls over Suspension and Debarment Requirements Federal Agency: U.S. Department of Housing and Urban Development Assistance Listing Number: 14.251 Federal Program Name: Economic Development Initiative, Community Project Funding, and Miscellaneous grants Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over compliance with the requirements of federal awards. Condition: Documentation of internal controls over compliance with suspension and debarment requirements at the time of procurement could not be located for covered transactions. Cause and Context: The Organization had begun planning the Landmark Building project before the major federal award agreements were finalized and, as such, had not implemented specific suspension and debarment procedures at that time. The Organization has since performed suspension and debarment verifications for all vendors with covered transactions charged to major federal award programs. Effect: Inadequate internal controls over suspension and debarment requirements may result in the Organization incurring disallowed costs from prohibited vendors. Recommendation: We recommend that management retains documentation of suspension and debarment verifications for all vendors with whom the Organization has covered transactions. Views of Responsible Officials: There is no disagreement with the finding.