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): CY 2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF BUTLER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Two covered transactions paid from SLFRF award funds during the audit period were identified and tested. One of the covered transactions, totaling $288,887, did not include the appropriate provisions in the contract, nor did the City require a certification or check the SAM EPLS to ensure the entity was not suspended or debarred prior to making payment. 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 Management of the City did not have a formalized suspension and debarment policy to ensure procedures related to suspension and debarment requirements were in place and followed. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF BUTLER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the City could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the City develop written policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
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 Finding: Material Weakness Repeat Finding This is a similar finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context Recipients are required to quarterly or annually submit Project and Expenditure reports (P&E) to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and 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 the $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report covering April 1, 2023 to March 31, 2024, was required to be submitted to the Treasury by April 30, 2024. The City submitted the annual P&E report during the audit period. However, there were no documented internal controls in place that would likely be effective in preventing, or detecting and correcting, noncompliance related to the reporting requirements. The report was prepared and submitted by one employee without an oversight, review, or approval process to ensure accuracy and completeness. The lack of internal controls was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF BUTLER 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). . . ." Cause A proper system of internal controls was not designed and implemented by management of the City to ensure that P&E reports were prepared by one individual and reviewed by another individual before submission to the Treasury. Effect Without the proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. As such, the City cannot ensure that the reports submitted are materially accurate and correct. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 16
2024-001: Activities Allowed or Unallowed & Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance Repeat of Prior Audit Finding 2023-001 Federal Program: Trans-National Crime Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2024 Criteria: 2 CFR section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively. Condition/Context: The Corporation was unable to provide a signed contract or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 5 out of 40 selections, no evidence of approval of signed contract could be provided (control). • For 6 out of 40 selections, no evidence of signed contract or reconciliation support could be provided (compliance). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $19,428. Cause: The Corporation did not retain/could not retrieve the signed contract or due to poor document retention. Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: The Corporation has sustained and built upon the improvements achieved in 2023, maintaining a reduced occurrence of the findings noted in prior audits. The HR solution, Rippling, implemented in 2024, continues to be an integral part of ensuring that all agreements and rate changes are accurately tracked and fully documented. This system has strengthened the Corporation’s document retention practices and supported ongoing compliance with federal regulations. The rollout of Rippling’s timesheet module was completed for all of the Corporation’s South American entities, Central America, UK, France, Gabon and Senegal. The Corporation continued roll out into 2025 and completed that for all remaining entities including Thailand, Malaysia, UAE, Saudia Arabia, Central and South Africa.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.306) non-federal entities must meet matching, level of effort, and earmarking requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that non-federal match contributions and earmarking calculations were properly tracked, documented, and verified. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of match contributions and earmarking calculations. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable matching and earmarking requirements. Recommendation: We recommend that the entity implement formal written policies and procedures for tracking and documenting matching contributions and earmarking calculations. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Criteria: Federal and state grant agreements typically require recipients to maintain effective internal controls over financial reporting. These include accurate and timely submission of required reports; proper documentation and retention of supporting records and review and approval processes to ensure compliance and accuracy. These requirements are also consistent with principles outline in Uniform Guidance (2 CFR Part 200), particularly sections 200.303 (Internal Controls) and 200.328 (Monitoring and Reporting Program Performance). Condition: The Association’s controls were not effective to ensure it was reporting expenditures related to excess meal costs. This internal control deficiency is considered to be a significant deficiency. Context: Our procedures included examining cash disbursements and related invoices for allowable costs. Cause: The Association included 100% of costs related to the nutrition program. In prior years, the Association recorded nutrition reimbursement revenue received from the State as a reduction in expense. When creating reimbursement requests from the Head Start program, only the excess meal costs were included. The Association changed its accounting practice in 2024 and recorded State meal reimbursement as revenue. However, they did not change how they prepared reimbursement requests from Head Start. As a result, 100% of meal costs were included in reimbursement requests. The Association reconciled this program with the final claim for 2024, which was prepared in 2025. Therefore, there are no questioned costs, as only the excess cost of meals was charged to the program. Effect: Weak internal controls over grant drawdowns and reporting increase the risk of reimbursement for unallowable costs; inaccurate performance reporting and potential loss of funding or reputational damage. Recommendation: The Association establish controls that allow for accurate reporting of expenditures when requesting reimbursement from grantors. View of responsible officials: There is no disagreement with this audit finding.
Finding 2024-001 - Activities Allowed or Unallowed & Allowable Costs/Cost Principles (Internal Control over Compliance/Compliance) ALN No.: 93.696 - Certified Community Behavioral Health Clinic Expansion Grants Award Year: January 1, 2024 – December 31, 2024 Federal Agency: United States Department of Health and Human Services Pass Through Entity: Not applicable Criteria: 2 CFR Part 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR section 200.405 requires federal awards be expended only for allowable activities. Condition/Context: South Shore made a clerical error in calculating allocated payroll amount claimed for one selection tested out of 60 selections leading to an error of $108. The sampling method was nonstatistical sampling. Cause: There was no proper review and oversight over the individual preparing the monthly claims for reimbursement. Effect: South Shore has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs were charged to the federal program. Questioned Costs: None. Recommendation: South Shore should enhance its internal control processes related to preparation and review of the monthly claim for reimbursement.
2024-001 Inadequate Controls over Grant Reimbursement Requests Condition—Costs for certain concrete poles used in the pole replacement program were submitted for reimbursement on multiple invoices, resulting in duplicate reimbursement claims of $440,570. Criteria—In submitting the accounting records to the grantor, the City is required to certify that reported costs were incurred in performance of eligible work. Internal controls that ensure reported costs are eligible and accurate should adhere to Part 2 CFR Section 200.303 of the Uniform Guidance. Cause—The deficiency appears to result from the use of two different methods to identify eligible costs (costs from invoices received directly from a vendor and costs applied to project work orders) without an appropriate reconciliation between the two methods. Effect—The lack of reconciliation of eligible costs allowed the duplicated costs claims to go undetected. Recommendation—We recommend that management review control procedures to ensure expenses included in grant reports are identified by the use of a single methodology and reconciled to accounting records. When multiple methodologies are utilized, a reconciliation to all other invoices should also be performed.
Federal Program/Award Identification: 11.307 COVID-19 Economic Adjustment Assistance – Economic Development Cluster Federal Award Project Number: 01-79-15100 Federal Award Project Year: 2019 Name of Federal Agency: United States Department of Commerce Name of the Applicable Pass-Through Entity: N/A Criteria: Per the Uniform Guidance (2 CFR Part 200.303), non-federal entities must establish and maintain effective internal control over the federal award to provide reasonable assurance that they are managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Organization is required to comply with all terms and conditions of the grant agreement with the Revolving Loan Fund (RLF) Award granted by the U.S. Department of Commerce, Economic Development Administration (EDA). Per 13 CFR section 307.11(a)(1)(ii), the Organization’s standard loan documentation must include evidence demonstrating that credit is not otherwise available on terms and conditions that permit the completion or successful operation of the activity to be finance. Condition: We noted that the Organization’s Loan Committee did not include in its loan documentation evidence demonstrating that credit was not otherwise available on terms and conditions that permit the completion or successful operation of the activity being financed. Cause: The EDA temporarily waived the requirement to collect evidence demonstrating that credit was not otherwise available. The Organization believed the requirement related to the evaluation of other available credit was waived, but this waiver expired on June 30, 2022. Effect or Potential Effect: Loan recipients could have been approved that had access to other credit, making them ineligible to be granted an RLF under the grant agreement. Loan documentation does not meet the requirements of 13 CFR section 307.11(a)(1)(ii). Questioned Costs: None Context: UHY selected and tested 4 of 8 EDA RLFs outstanding as of December 31, 2024. None of the loans selected for testing had documentation evidencing that credit was not otherwise available on terms and conditions that permit the completion or successful operation of the activity being financed. Recommendation: The loan committee should implement a checklist of all required loan documentation. The checklist should be reviewed by a member of management prior to execution of the loan agreement. Views of Responsible Officials and Planned Corrective Action: See “Management’s Response and Corrective Action” plan section.
Federal Program/Award Identification: 11.307 COVID-19 Economic Adjustment Assistance – Economic Development Cluster Federal Award Project Number: 01-79-15100 Federal Award Project Year: 2019 Name of Federal Agency: United States Department of Commerce Name of the Applicable Pass-Through Entity: N/A Criteria: The Organization is required to comply with all terms and conditions of the grant agreement with the Revolving Loan Fund (RLF) Award granted by the U.S. Department of Commerce, Economic Development Administration (EDA). 2 CFR 200.303(a) requires that a non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. According to the “Specific Award Conditions” document provided by the EDA to the Organization, the Organization must submit the “Federal Financial Report (form SF-425) on a semiannual basis during the period of performance of the Award. The Report must be submitted within 30 calendar days of the midpoint and end of the fiscal year. Condition: We noted that management did not submit form SF-425 for the reporting period December 31, 2024, within the thirty-day requirement specified in the “Specific Award Conditions” document. Cause: The Organization did not have an effective internal control in place to ensure the semiannual SF-425 report was submitted by the due date. Effect or Potential Effect: The Organization did not comply with reporting due dates. Questioned Costs: None Context: UHY tested the two semiannual SF-425 reports submitted for reporting periods within 2024. One of the two were not submitted within the 30-day requirement. In addition, UHY tested submission of two “RLF Financial Report” (ED-209) reports, which were required to be submitted semi-annually, and found they were submitted within the 30-day requirement. Recommendation: We recommend the Organization design and implement an internal control to ensure reports are submitted by the required due dates. Views of Responsible Officials and Planned Corrective Action: See “Management’s Response and Corrective Action” plan section.
2024-002 Finding – Federal Award Type: Subrecipient Monitoring – Non-Compliance and Significant Deficiency in Internal Control Over Compliance. AL Number: 10.163 Market Protection and PromotionCriteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR section 200.332, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, all requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Condition / Context: Oregon Tilth passed through $1,593,444 in funding to subrecipients under Assistance Listing 10.163. During our audit, we noted that Oregon Tilth did have documented written procedures or controls in place to ensure compliance with the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) subrecipient monitoring requirements. It was noted that within subaward contracts, required federal contract information was provided. Further, subrecipients are being evaluated for risk of non-compliance, prior to engaging in a subcontract. While monitoring has improved, as Oregon Tilth is having regular meetings to ensure tasks are being completed timely and providing technical assistance when needed, it was noted that in the sample of five subrecipients, three subrecipient was subject to 2 CFR Subpart F and the audit for this entity was not obtained. Per 2 CFR 200.332(d)(2) & (3), an entity must ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, highlighting the status of action planned or taken to address Single Audit Finding related to the subaward. They must also issue a management decision for applicable audit findings. Further, per 2 CFR 200.332(g), pass-through entities must verify that a subrecipient is audited as required by 2 CFR 200 subpart F. Oregon Tilth did have the subrecipient answer a questionnaire that included a question asking if the subrecipient was subject to 2 CFR 200 subpart F, however they did not obtain the audit or verify in any other way that the client was audited as required by 2 CFR 200 subpart F. Cause: Procedures were in place to ensure that Oregon Tilth is maintaining proper subrecipient monitoring for each federal subrecipient, however the procedures were not fully compliant with 2 CFR 200.332. Effect: Failure to maintain sufficient subrecipient monitoring may result in the wrongful use of federal funds and non‐compliance with the provisions of applicable requirements of the federal award. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s Response: Management concurs with the finding and will implement effective internal controls to ensure that subrecipient monitoring is properly done and documented appropriately.
Department of Homeland Security, State of South Dakota Office of Emergency Management, Federal Financial Assistance Listing #97.039, DR‐4469‐0015 & DR‐4469‐0016, 2024 Hazard Mitigation Grant Program Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Cash Management Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) states that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Material expenditures were claimed for reimbursement with no documented formal review and approval. Cause: The Association did not have formal documented review and approval over bar‐code material charge‐outs that were claimed for reimbursement and correction entries for unused materials returned to inventory. Effect: Without a formal documentation of review of expenses, demonstrating the expenditures comply with federal regulations is difficult. Questioned Costs: No questioned costs over $25,000. Context/Sampling: Nonstatistical sampling was used for activities allowed or unallowed, allowable costs/cost principles and period of performance. Sample size was 60 transactions which accounted for $1,965,908 out of $2,435,532 of federal program expenditures of which $1,114,700 was submitted for reimbursement. For cash management, sampling was not used due to a single submission for reimbursement. Repeat Finding form Prior Year: No Recommendation: We recommend the Association review the process for documenting the review and approval over material charge‐outs and correction entries for unused materials returned to inventory prior to the amounts being submitted for reimbursement. Views of Responsible Officials: Management agrees with the finding.
Department of Homeland Security, State of South Dakota Office of Emergency Management, Federal Financial Assistance Listing #97.039, DR‐4469‐0015 & DR‐4469‐0016, 2024 Hazard Mitigation Grant Program Reporting Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) states that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: In two of three quarterly performance reports tested, we noted the Association improperly overstated expenditures incurred to date. Cause: The Association’s independent review process over the quarterly performance reports did not identify the overstatement. Effect: Lack of compliance with designed internal controls over reporting could result in the Association reporting incorrect or incomplete information. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 3 reports out of 8 quarterly performance reports. Repeat Finding form Prior Year: No Recommendation: We recommend the Association review internal control procedures over reporting to ensure reported amounts agree to supporting documentation and also that supporting documentation is retained. Views of Responsible Officials: Management agrees with the finding.
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): FY2024 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 2023-003. Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collecting of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. The County had not performed procedures to ensure the vendors were not suspended or debarred or otherwise excluded or disqualified from participation in federal assistance programs or activities during the audit period on all of the four vendors determined to have covered transactions, totaling $1,200,692, that were paid with SLFRF funds. INDIANA STATE BOARD OF ACCOUNTS 18 WHITE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County's management did not foresee instances when the County's contract template was not utilized. Effect The failure to properly implement effective internal controls enabled noncompliance to go undetected. 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 the County's management properly implement and strengthen the policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024-002 Documentation Retention – Tenant File (Internal Control) Information on universe and population size The universe consisted of all Housing Choice Voucher (HCV) files for tenants certified and re-certified by the Authority for the fiscal year. The total population was 182. Sample size information A non‑statistical sample of 19 tenant files were selected for testing. One error was identified. Identification as a repeat finding This is not a repeat finding. Criteria 2 CFR §200.303(c) requires non-Federal entities to establish and maintain effective internal controls over Federal awards that provide reasonable assurance of compliance with applicable laws, regulations, and program requirements. HUD Housing Choice Voucher Program guidance (HUD Handbook 7420.7, Chapter 5) includes that maintaining complete tenant files, including form HUD-50058, executed leases, income verification, rent determinations, inspection documentation, and related support, is a key control. Statement of condition During our review of 19 tenant files, one file had missing required documents. The required documents that were not included consisted of the executed lease, rent determinations, and inspection documentation. Although alternative documentation confirmed the tenant’s eligibility in the program, the absence of the required original supporting records demonstrates that the controls over document retention and safeguarding were not operating effectively. Cause The PHA lacks a formalized record‑retention control that prevents accidental deletion or destruction of tenant files and does not perform a supervisory review to verify that all electronic and hard‑copy records are archived before files are purged. Effect Absent proper documentation, the PHA cannot fully demonstrate tenant eligibility, increasing the risk of ineligible assistance payments and regulatory noncompliance. Because the issue was isolated to a single tenant file, the likelihood of material noncompliance is remote; however, it represents a significant deficiency. Auditor non-compliance code S – Internal Control Deficiencies Questioned costs None Views of responsible officials Management concurs with the finding and is in the process of implementing an electronic document‑management system with automated backup and periodic supervisory reviews to prevent future occurrences. Context This was an isolated instance of noncompliance, affecting 1 of 19 tenant files tested. No systemic issues were noted in the other files reviewed. Recommendation We recommend that the Authority design and implement a record‑retention policy and require supervisory review prior to any file purging to ensure all required documentation is retained.Finding resolution status Unresolved Information on universe and population size The universe consisted of all Housing Choice Voucher (HCV) files for tenants certified and re-certified by the Authority for the fiscal year. The total population was 182. Sample size information A non‑statistical sample of 19 tenant files were selected for testing. One error was identified. Identification as a repeat finding This is not a repeat finding. Criteria 2 CFR §200.303(c) requires non-Federal entities to establish and maintain effective internal controls over Federal awards that provide reasonable assurance of compliance with applicable laws, regulations, and program requirements. HUD Housing Choice Voucher Program guidance (HUD Handbook 7420.7, Chapter 5) includes that maintaining complete tenant files, including form HUD-50058, executed leases, income verification, rent determinations, inspection documentation, and related support, is a key control. Statement of condition During our review of 19 tenant files, one file had missing required documents. The required documents that were not included consisted of the executed lease, rent determinations, and inspection documentation. Although alternative documentation confirmed the tenant’s eligibility in the program, the absence of the required original supporting records demonstrates that the controls over document retention and safeguarding were not operating effectively. Cause The PHA lacks a formalized record‑retention control that prevents accidental deletion or destruction of tenant files and does not perform a supervisory review to verify that all electronic and hard‑copy records are archived before files are purged. Effect Absent proper documentation, the PHA cannot fully demonstrate tenant eligibility, increasing the risk of ineligible assistance payments and regulatory noncompliance. Because the issue was isolated to a single tenant file, the likelihood of material noncompliance is remote; however, it represents a significant deficiency. Auditor non-compliance code S – Internal Control Deficiencies Questioned costs None Views of responsible officials Management concurs with the finding and is in the process of implementing an electronic document‑management system with automated backup and periodic supervisory reviews to prevent future occurrences. Context This was an isolated instance of noncompliance, affecting 1 of 19 tenant files tested. No systemic issues were noted in the other files reviewed. Recommendation We recommend that the Authority design and implement a record‑retention policy and require supervisory review prior to any file purging to ensure all required documentation is retained.
Finding 2024-001 E. Eligibility, L. Reporting (Form HUD-50058 MTW), and N. Special Tests and Provisions – N1. Waiting List, N2. Reasonable Rent, N3. Utility Allowance Schedule, N6. Housing Assistance Payment Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2024 through December 31, 2024 Program No.: IL002-01-00024D Section 8 – Housing Choice Vouchers (HCV) and Rental Assistance Demonstration (RAD) Program Year: January 1, 2024 through December 31, 2024 Program No.: Multiple Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR section 200.303 of the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states the following regarding internal control: “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).” Eligibility – Most Public Housing Authorities (PHAs) devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of the household signs: (1) one or more release forms to allow the PHA to obtain information from third parties; (2) a federally prescribed general release form for employment information; and (3) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212, 5.230, and 5.601 through 5.615). The PHA must: • As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, 960.259, and 982.516). • For both family income examinations and reexaminations, obtain and document in the family file third-party verification of: (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 960.259 and 982.516). • Determine income eligibility and calculate the tenant’s rent payment using the documentation from third-party verification in accordance with 24 CFR part 5 subpart F (24 CFR sections 5.601 et seq.) (24 CFR sections 960.253, 960.255, 960.259, 982.201, 982.515, and 982.516). • Select tenants from the waiting list (24 CFR sections 960.206 through 960.208 and 982.202 through 982.207). • Reexamine family income and composition at least once every 12 months (Public Housing program) or 24 months (HCV program) and adjust the tenant rent and housing assistance payment as necessary using the documentation from third-party verification (24 CFR sections 960.253, 960.257, 960.259, and 982.516). In addition, the Chicago Housing Authority (the Authority) is participating in HUD’s Moving to Work (MTW) Demonstration Program. The Authority’s initial MTW Agreement was signed by the Authority and HUD on February 6, 2000, at which time HUD allowed the Authority to implement its Plan for Transformation. On June 26, 2008, the Authority and HUD signed the Amended and Restated MTW Agreement that extended the Authority’s participation in the MTW program through December 31, 2018. On April 4, 2016, the MTW Agreement was further modified and extended through December 31, 2028. Through this agreement, HUD waived selected statutory and regulatory requirements to allow the Authority flexibility in achieving the stated objectives of the MTW Demonstration Program. As such, per the Authority’s HCV Administrative Plan, reexamination of family income and composition under the HCV program is performed biennially or triennially. Reporting (Form HUD-50058 MTW) – Per 24 CFR part 908 and 24 CFR section 982.158, the PHA is required to submit the Form HUD-50058 MTW, Family Report, each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Form HUD-50058 when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability. The following line items on Form HUD-50058 MTW contain critical information: (1) Line 1c – Program (2) Line 2a – Type of Action (3) Line 2b – Effective Date of Action (4) Line 2k – FSS Participation Now or in the Last Year (5) Line 3b, 3c – Last Name, First Name (6) Line 3e – Date of Birth (7) Line 3n – Social Security Numbers (8) Line 5a – Unit Address (9) Line 5h – Date Unit Last Passed HQS Inspection (10) Line 5i – Date of Last Annual Inspection (11) Line 7i – Total Annual Income (12) Line 13h – Contract Rent to Owner (13) Line 13k – Tenant Rent (14) Line 13x – Mixed Family Tenant Rent (15) Line 17a – Participation in Special Programs – Participation in the Family Self Sufficiency (FSS) Program (16) Line 17k(2) – FSS Account Information – Balance Condition: Eighty tenants and participants were selected for testing internal controls over compliance with the eligibility and Form HUD-50058 MTW reporting requirements for the program. These same tenants and participants were tested for compliance with Form HUD-50058 MTW reporting requirements. For the 80 tenants and participants selected, 40 were Public Housing and RAD tenants (23 Public Housing and 17 RAD) and 40 were Housing Choice Voucher (HCV) participants. There were five Public Housing tenants, two RAD tenants, and four HCV participants for which control deviations were noted over eligibility and Form HUD-50058 reporting requirements (13.8% overall MTW deviation rate). There was one Public Housing tenant and one RAD tenant for which compliance exceptions were noted over Form HUD-50058 MTW reporting requirements (2.5% overall MTW exception rate). The nature of the control deviations and compliance exceptions identified are as follows: Control: • In the case that a certification and/or recertification was to be performed in 2024, relevant forms were signed after the effective date and submittal to HUD (Low Rent—three instances and RAD—one instance). • In the case that a certification and/or recertification was to be performed in 2024, it was not retained on file (Low Rent—one instance). • In the case that a recertification was to be performed in 2024, the examination/re-examination checklist was initialed by the certification specialist (CS), but forms were missing and/or not signed by tenant and recertification clerk (Low Rent—one instance). • In the case that a change in unit was to be performed in 2024, previous re-examination was not retained on file and HUD Key Line items could not be agreed (RAD—one instance). • In the case that a certification and/or recertification was to be conducted in 2024, relevant forms were not signed before HUD 50058 effective date (HCV—two instances). • In the case that a certification and/or recertification was to be conducted in 2024, recertification was not conducted (HCV—one instance). • In the case that a certification and/or recertification was to be conducted in 2024, the Form HUD 50058, Family Report, was not sent (i.e., no MTCS sent date was visible in Yardi) (HCV—one instance). Compliance: • In the case that a certification and/or recertification was to be performed in 2024, it was not retained on file and HUD Key Line items could not be agreed (Low Rent—one instance). • In the case that a change in unit was to be performed in 2024, previous re-examination was not retained on file and HUD Key Line items could not be agreed (RAD—one instance). In addition, 80 tenants and participants were selected for testing of compliance with eligibility requirements for the program. For the 80 tenants and participants selected, 40 were Public Housing and RAD tenants (23 Public Housing and 17 RAD) and 40 were HCV participants. In our testing, there were six Public Housing tenants, two RAD tenants, and one HCV participant with compliance exceptions (11.3% overall MTW exception rate). The nature of the compliance exceptions identified is as follows: • In the case that a certification and/or recertification was to be performed, relevant forms were not signed (Low Rent—one instance). • In the case that a certification and/or recertification was to be performed, annual income was not properly calculated. Therefore, rent was not properly calculated (Low Rent—one instance). • In the case that a certification and/or recertification was to be performed, relevant forms were not signed and annual income support was not provided. Therefore, EY could not determine whether annual income and rent were properly calculated (Low Rent—one instance). • In the case that a certification and/or recertification was to be performed, annual income support was not provided. Therefore, EY could not determine whether annual income and rent were properly calculated (Low Rent—one instance). • In the case that a certification and/or recertification was to be performed, relevant forms were signed after the effective date and submittal to HUD (Low Rent—two instances and RAD—one instance). • In the case that a certification and/or recertification was to be conducted in 2024, recertification was not conducted (RAD—one instance). • In the case that a certification and/or recertification was to be conducted in 2024, recertification was not conducted (HCV—one instance). Furthermore, for Public Housing, RAD, and HCV, the quality review specialists perform a quality review of a sample of tenant/participant recertification files to ensure compliance with eligibility and reporting (Form HUD-50058 MTW) requirements. For Public Housing and RAD, management did not maintain evidence of documentation of completeness and accuracy regarding populations utilized in selecting samples for the quality control reviews performed for the entirety of FY24. In addition, management did not design an internal control to ensure findings identified in the quality control review are resolved. Also, for HCV, a control was tested in FY23 but found to be ineffective due to control design deficiency: The Authority was not consistently documenting follow-up activities on identified findings from the quality control reviews in a timely manner. Corrective action was not implemented until late 2024, however, as a substantial portion of the audit year was not subject to the revised control. Cause: Management has not designed an internal control to ensure that the compliance requirements are met. Effect or Potential Effect: Ineligible tenants or participants may be inappropriately allowed to participate in federal programs, and information reported to HUD could be inaccurate or incomplete. Questioned Costs: None. Context: The Public Housing programs had 12,417 (Low Rent) and 5,706 (RAD) tenants on its rent rolls, respectively, as of December 31, 2024. The Low Rent and RAD programs reviewed 6,630 and 4,923 tenants, respectively, during 2024. The HCV program had 51,403 participants as of December 31, 2024, and 33,545 participants who were reviewed for eligibility during 2024. All active tenants and participants have a Form HUD-50058 MTW, which is filed annually (Public Housing and RAD), biennially (HCV), or triennially (HCV). Identification as a Repeat Finding, if Applicable: This finding is a repeat of finding 2023-001 from the prior year. Recommendation: The Authority should design sufficiently precise policies, procedures, and internal controls to ensure ineligible tenants or participants are not inappropriately allowed to participate in federal programs and reporting to HUD is complete and accurate. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
Finding 2024-002 N. Special Tests and Provision: N17. Environmental Contaminants Testing and Remediation Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2024 through December 31, 2024 Program No.: IL002-01-00024D Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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 section 5.703 states, “HUD housing must be decent, safe, sanitary and in good repair. Owners of housing described in §5.701(a), mortgagors of housing described in §5.701(b), and PHAs and other entities approved by HUD owning housing described in §5.701(c), must maintain such housing in a manner that meets the physical condition standards set forth in this section in order to be considered decent, safe, sanitary and in good repair. These standards address the major areas of the HUD housing: the site; the building exterior; the building systems; the dwelling units; the common areas; and health and safety considerations.” Condition: Forty failed uniform physical condition standards (UPCS) inspections and 30 failed environmental inspections were selected for compliance testing out of the total 5,633 failed UPCS inspections and 176 failed environmental inspections, respectively, reported by the Authority. Internal controls were not in place to ensure that failed UPCS and environmental inspections were remediated. For 23 of the 40 (57.5%) failed UPCS inspections and 17 of the 30 (56.7%) failed environmental inspections tested for compliance, the Authority did not maintain adequate supporting documentation to evidence that the safety/environmental concern from the failed inspection was remediated or remediated in a timely manner. The nature of the issues is as follows: • For eight failed UPCS inspections sampled, remediation was not completed. • For 15 failed UPCS inspections sampled, remediation was not completed timely. • No work order was available for 10 failed environmental inspections sampled; therefore, testing for remediation/correction of safety concerns/findings could not be performed • For four failed environmental inspections sampled, the work order was in completed status; however, no documentation/support was available to evidence that the safety concerns/findings were remediated/completed. • For three failed environmental inspections sampled, the remediation was not completed in a timely manner. Cause: Internal controls were not in place over the creation and follow-up of work orders related to failed UPCS and environmental inspection reports to ensure the identified safety/environmental concerns were remediated. Effect or Potential Effect: HUD housing may not meet the physical condition standards and environmental contaminants may not be remediated. Questioned Costs: None. Context: The Public Housing program had a total of 15,263 UPCS inspections performed during the year ended December 31, 2024, of which 5,633 were failed inspections that required remediation, 6,267 passed with comments, 2,763 were inconclusive, and 600 were canceled. The Public Housing program had a total of 176 environmental inspections performed during the year ended December 31, 2024. Identification as a Repeat Finding, if Applicable: This finding is a repeat of finding 2024-003 from the prior year. Recommendation: The Authority should implement internal controls over the monitoring of failed UPCS and environmental inspections to ensure that identified safety/environmental concerns are remediated. Adequate supporting documentation should be maintained of all remediation activities. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
Finding 2024-003 N. Special Tests and Provisions: N3. Utility Allowance Schedule Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Rental Assistance Demonstration (RAD) Program Year: January 1, 2024 through December 31, 2024 Program No.: Multiple Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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 PHA must maintain an up-to-date utility allowance schedule. The PHA must review utility rate data for each utility category each year and must adjust its utility allowance schedule if there has been a rate change of 10 percent or more for a utility category or fuel type since the last time the utility allowance schedule was revised (24 CFR section 982.517).” Condition: RAD – The underlying details supporting the analysis of changes in utility rate data and evidence of review over the annual utility allowance schedule were not retained. Cause: RAD – Supporting documentation for the inputs to the utility allowance schedule analysis of changes in utility rate data prepared by a third-party service provider and evidence of review over the annual utility allowance schedule by Authority management were not retained by the Authority. Effect or Potential Effect: RAD – The utility allowance schedule could be inaccurate or incomplete. Questioned Costs: None. Context: The RAD program had 5,706 tenants on its rent rolls as of December 31, 2024. Identification as a Repeat Finding, if Applicable: This finding is a partial repeat of finding 2024-004 from the prior year. Recommendation: RAD – The Authority should implement and retain supporting documentation of internal controls over the utility allowance schedule and amounts reported on line 12m or 15g of the Form HUD-50058. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
Finding 2024-004 N. Special Tests and Provisions: N4. NSPIRE/Housing Quality Standards Inspections Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Section 8 – Housing Choice Vouchers (HCV) and Rental Assistance Demonstration (RAD) Program Year: January 1, 2024 through December 31, 2024 Program No.: Multiple Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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).” Condition: For 4 of 40 (10%) inspections sampled to test the Authority’s internal controls to ensure inspections are completed in accordance with the Authority’s HCV Administrative Plan and meet housing quality standards (HQS), we noted that the inspections completed by the Compliance Specialist in fiscal year 2024 were not conducted in accordance with the required biennial time frame. Based on the date of the prior inspections, the inspections were not conducted within the two years required by the HCV Administrative Plan. Cause: The Authority’s internal control, whereby a knowledgeable Compliance Specialist (i.e., Inspector) performs a biennial inspection of the unit and completes a standardized inspection checklist to confirm the unit meets the housing quality standards, was not operating effectively during the fiscal year. Effect or Potential Effect: HQS inspections may not be conducted biennially in accordance with the Authority’s HCV Administrative Plan. Questioned Costs: None. Context: There were 28,111 HQS inspections performed for the HCV program under the MTW during the fiscal year ended December 31, 2024. Identification as a Repeat Finding, if Applicable: This finding is not a repeat finding from the prior year. Recommendation: The Authority should follow its established internal control over HQS inspections as outlined in its HCV Administrative Plan. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
Finding 2024-005 N. Special Tests and Provisions: N1. Wage Rate Requirements Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2024 through December 31, 2024 Program No.: IL002-01-00024D Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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).” Condition: For three of 24 (12.5%) contracts/task orders sampled to test the Authority’s internal control to ensure certified payroll reports (CPRs) are submitted by contractors/subcontractors, we noted the following: • For one (4.2%) of the 24, the contract summary checklist completed at contract closeout was not prepared or reviewed correctly, as it was noted that CPR findings were still outstanding and the contract could not be closed. • For two (8.3%) of the 24, the reviewed contract summary checklist was not provided. Cause: The Authority’s internal control to ensure all CPRs have been submitted prior to contract closeout was not operating effectively. Effect or Potential Effect: Required CPRs from contractors and subcontractors may not be submitted. Questioned Costs: None. Context: Public Housing expenditures reported in the schedule of expenditures of federal awards were $171,219,053 for the year ended December 31, 2024, representing 15.1% of total federal expenditures under Assistance Listing No. 14.881 of $1,106,629,432. Identification as a Repeat Finding, if Applicable: This finding is not a repeat finding from the prior year. Recommendation: The Authority should follow its established internal control to ensure all CPRs are submitted by contractors/subcontractors prior to contract closeout. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
Finding 2024-006 I. Procurement, Suspension and Debarment Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2024 through December 31, 2024 Program No.: IL002-01-00024D Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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 Uniform Guidance 2 CFR section 200.318, general procurement standards states “(a) Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” The Uniform Guidance 2 CFR section 200.319 states that “all procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” The Authority’s procurement policy for a cooperative (“piggyback”) procurement requires an agency contract and amendments. The Authority’s internal control procedures require procurements of more than $500,000 to have Board of Commissioners' approval. Condition: For one of nine (11.1%) procurement transactions sampled to test the Authority’s internal controls to ensure procurements are executed and documented in accordance with the Uniform Guidance procurement standards, we noted that the procurement was not approved by the Board of Commissioners and there was no executed agreement or amendment that covered fiscal year 2024. Cause: The Authority’s internal control over the review and approval of procurement transactions was not operating effectively. Effect or Potential Effect: Procurements may not be following Uniform Guidance procurement standards. Questioned Costs: A total of $3,500,000 related to Assistance Listing No. 14.881, representing the one procurement that was not approved by the Board and did not have an agreement or amendment in place that covered fiscal year 2024. Context: The one procurement totaled $3,500,000 out of nine procurement transactions sampled totaling $4,983,902. Public Housing expenditures reported in the schedule of expenditures of federal awards were $171,219,053 for the year ended December 31, 2024, representing 15.1% of total federal expenditures under Assistance Listing No. 14.881 of $1,106,629,432. Identification as a Repeat Finding, if Applicable: This finding is not a repeat finding from the prior year. Recommendation: The Authority should follow its established internal control over the review and approval of procurement transactions. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2024-002 Eligibility Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Medical Assistance. Specific eligibility requirements are included for participants’ Social Security number verification. Minnesota Statutes, Section 256B.05, requires county agencies to administer Medical Assistance. Condition: The Minnesota Department of Human Services maintains the computer system, METS, which is used by the County to support the eligibility determination process. In a sample of 40 case files tested for eligibility, two participants’ Social Security numbers were not verified. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to participants in this program. Context: The State of Minnesota and the County split the eligibility determination process. Generally, the County resolves eligibility issues when prompted by the system, while the State performs the initial review of the case files, including determining the information in METS is verified. Participants receive benefits from the State. The population consisted of 7,560 active METS cases enrolled in the Medical Assistance Program in 2024; the sample size was 40 case files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information in METS and lack of verification of key eligibility-determining factors increases the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel responsible for resolving eligibility issues in METS did not ensure all required information was input or updated correctly or verified. Recommendation: We recommend the County implement additional procedures to provide reasonable assurance that all necessary documentation needed to resolve eligibility issues exists and is properly input, updated, or verified in METS. In addition, the County should consider providing further training to program personnel. View of Responsible Official: Concur
Federal agency: U.S. Department of Agriculture, Natural Resources Conservation Service Federal program Name: Partnerships for Climate-Smart Commodities Assistance Listing Number: 10.937 Federal Award Identification No.: NR243A750004G023 Award Period: 12/9/2023 – 12/31/2028 Compliance Requirement: Activities Allowed or Unallowed, Allowable Cost/Cost Principles Type of Finding: • Significant Deficiency in Internal Control over Compliance • Compliance Finding 2024-001: Partnerships for Climate-Smart Commodities- Allowable Cost/Cost Principles Criteria: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Additionally, per 2 CFR section 200.303(a), a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our review of the payroll allocation for August 2024, we noted that one employee’s payroll costs were incorrectly charged to the grant, resulting in an overstatement of grant expenditures for that period.Context: The total federal expenditures under the Partnerships for Climate-Smart Commodities program were approximately $3,074,267 for the year ended December 31, 2024. The payroll charges tested during our procedures were approximately $95,770, which represented approximately 3% of total expenditures charged to the grant during the year. The misallocation noted was isolated to a single employee’s payroll costs for one month and did not represent a systemic issue across all payroll transactions. Cause: The misallocation occurred due to insufficient review of payroll allocations. Existing internal controls did not include a detailed verification process to ensure that employee time charges were accurately aligned with actual grant-related activities. Effect: As a result, grant expenditures were overstated for the period. If not corrected, this misallocation could impact the accuracy of financial reporting and result in potential noncompliance with grant cost allowability requirements. Identification as a Repeat Finding, if Applicable: No. Questioned Costs: None identified. Recommendation: We recommend that management strengthen internal controls over payroll allocation by implementing a documented review and approval process to verify the accuracy and allowability of personnel expenses charged to Federal awards. This process should ensure compliance with 2 CFR §200.430 and be incorporated into official records, consistent with the entity’s established accounting policies. Responsible Official: President Views of Responsible Official and Planned Corrective Action: Management concurs with the audit finding. See the accompanying management’s corrective action plan for planned corrective action.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Programs: 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 Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The County used COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program money to purchase four ambulances in May 2024. However, the method of acquiring the ambulances was through a lease agreement in which the County paid the full amount of $1,119,505 upon the first payment due date. This use of funds falls under the definition of debt service and is explicitly prohibited by the SLFRF final rule. Therefore, the County is found to be in noncompliance with both the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance 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 35.9 states in part: "A recipient must comply with all other applicable Federal statutes, regulations, and executive orders, and a recipient shall provide for compliance with the American Rescue Plan Act, . . ." Federal Register, Vol. 87, No.18, page 4340, January 27, 2022, states in part: ". . . For all recipients, funds may not be used for debt service or replenishing financial reserves . . ." Federal Register, Vol. 87, No.18, page 4430, January 27, 2022, states in part: ". . . The final rule maintains the restriction on the use of funds for debt service . . . First, debt services and reserve replenishment costs do not constitute the provision of services to constituents. As noted in the interim final rule, financing expenses––such as issuance of debt or payment of debt service––do not provide services or aid to citizens. . . . With SLFRF resources available, recipients have less need to incur debt for otherwise-eligible SLFRF uses. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 GRANT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A deficiency in internal controls over allowable activities and allowable costs led to noncompliance. County officials were not aware SLFRF funding could not be used to pay the remaining balance of a lease agreement. 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, noncompliance. Federal award funds were used for unallowable costs, placing the County in noncompliance with program requirements. Noncompliance with the provision of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the county. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County review and evaluate internal controls over federal programs to ensure compliance with applicable requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2024 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the County in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Recipients are required to quarterly or annually submit Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon 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. INDIANA STATE BOARD OF ACCOUNTS 19 GRANT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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) fundings. 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 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 County submitted four quarterly P&E reports during the audit period. The County's process for the completion and submission of P&E reports was that the County Auditor prepared each P&E report based on the County's financial ledgers without evidence of a proper oversight or review process. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was designed, but management of the County did not ensure that policies and procedures that were in place were followed. 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, noncompliance. Noncompliance with the provision of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County review and evaluate internal controls over federal programs to ensure compliance with applicable requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Department of Treasury, State of Iowa Chief Information Officer, Federal Financial Assistance Listing 21.027, NOFO #007 – 433524,433385, 2024 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parities that are debarred, suspended, or excluded from participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: - One instance where the Cooperative followed a bid process, however, the documentation was not retained to support the selection. Additionally, the contract with the vendor was missing required contract provisions in accordance with Uniform Guidance. - Two instances where the Cooperative did not follow the procurement process as detailed in the procurement policy and did not have any formal documentation or contract in place with the vendor. - Three instances where the Cooperative entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Additionally, the cooperative may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 3 out of 5 vendors were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management implement procedures related to the review of contracts to ensure the procurement methods are being followed and to ensure contracts include the required Uniform Guidance provisions. Also, management should incorporate procedures to ensure vendors are not suspended or debarred from doing business with the federal government. Documentation should be retained to provide evidence that procedures were completed. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds: American Rescue Plan Act - 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 Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County did not have an effective internal control system in place related to the suspension and debarment requirements. A population of eight covered transactions, totaling $1,359,873, of which payments to each individual vendor equaled or exceeded $25,000 paid from SLFRF funds were identified during the audit period. Three of the transactions, totaling $811,500, were selected for testing. For each of the three transactions, the County did not verify the vendor's suspension or debarment status prior to payment due to the County not having an effective internal control system in place to verify that contractors were neither suspended or debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 18 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 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 County was unable to provide documentation to demonstrate they had effective internal controls in place to verify suspension and debarment status for covered transactions it intends to pay with federal funds. The County 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 internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors and subrecipients to whom payments were equal to or in excess of $25,000 were not verified as to whether or not they were suspended, debarred, or otherwise excluded. 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 those funds. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 19 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards that will be paid with federal grant funds. 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 - Lead Reduction Grant - 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): FY23-24 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context For the Lead Reduction Grant, recipients were required to submit quarterly reports through the end of the grant period. Although the required reports were submitted timely as required, there were no internal controls in place that would likely be effective in preventing, or detecting and correcting, noncompliance related to the report. One employee prepared and submitted the reports without any evidence of an oversight or review process. The lack of internal controls was a systemic issue that continued throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed and implemented by management of the County, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The County had not developed any policies and procedures requiring a secondary review of reports for accuracy prior to submission. Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the County cannot ensure that the reports submitted are materially accurate and that any potential errors would be identified and corrected in a timely manner. 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 effective internal controls are implemented over all grant compliance requirements for reporting related to the Lead Reduction Grant. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - American Rescue Plan Act - 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): FY2024 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 2023-002. 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. INDIANA STATE BOARD OF ACCOUNTS 21 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 - Coronavirus 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 P&E report was submitted April 30, 2024, as required; however, the information submitted did not match the County's ledgers for Total Expenditures and Total Cumulative Expenditures. Total Period Expenditures was reported as $2,720,340, as was Total Cumulative Expenditures. The ledger amount was $2,631,190, resulting in expenditures being overstated by $89,150. In addition, supporting documentation was not provided to support the amounts reported as Total Period Obligations and Cumulative Period Obligations, resulting in the inability to verify the accuracy of the information reported. There were no internal controls in place to prevent, or detect and correct, noncompliance related to the P&E report. Even though a County Commissioner reviewed and approved the report submission, as indicated by his signature, this review was not effective. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County's system of internal controls was not effective in detecting the errors noted in the Condition and Context above and did not allow for the appropriate supporting documentation to be retained for review. INDIANA STATE BOARD OF ACCOUNTS 22 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the County did not report current period obligations, current period expenditures, and cumulative expenditures properly when filing the P&E reports during the audit period. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures to ensure that effective internal controls are implemented over all grant compliance requirements for reporting and allow for the retention of all required supporting documentation. 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: Federal Transit Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Transportation Federal Program: Federal Transit Formula Grants Assistance Listings Number: 20.507 Federal Award Number and Year (or Other Identifying Number): IN-2022-018, IN-2024-003-00, IN-2018-028-06 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The City has a process in place that requires the Board of Public Works to approve bids and contracts, but the process did not operate effectively for one of three vendors tested who were subject to the small-purchase procurement requirements. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $129,259. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition nor was a contract awarded for the services provided. Suspension and Debarment Prior to entering into covered transactions with federal award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Inquiry and fieldwork determined that the City had a process in place to verify that vendors were not suspended or debarred but the process was not operating effectively. There was no documented oversight, review, or approval process to ensure the process was completed timely. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two vendors were selected for suspension and debarment testing. We were able to determine that suspension and debarment searches on the SAM.GOV website were made, but we could not determine that the searches occurred prior to contracting with the vendor. For the first vendor, the documentation provided indicated that the search for suspension and debarment on the SAM.GOV website was done subsequent to the purchase of the equipment. For the second vendor, the date of the search on the SAM.GOV website could not be determined. Additionally, the suspension and debarment verification was done by one employee without evidence of oversite and review. The lack of internal controls and noncompliance was a systemic issue throughout the audit period for the federal awards IN-2022-018, IN-2024-003-00, and IN-2018-028-06. 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 1200.10 adopts the Office of Management and Budget (OMB) guidance in subparts A through I of 2 CFR part 180, as supplemented by this part, as the Department of Transportation policies and procedures for nonprocurement suspension and debarment. 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not designed or implemented a system of internal controls that would have ensured procedures were in place that would comply with the provisions of federal statutes, regulations, and the terms and conditions of the federal award in relation to the requirements of the Procurement and Suspension and Debarment compliance requirement. For the small purchases procurement requirement, several purchases from one vendor had occurred without the City noticing the small purchases threshold had been exceeded. For the requirement to check the suspension and debarment status, the City failed to document the date searched in one case and saved a search dated after the award date in another case. Effect The failure to design and implement an effective internal control system enabled noncompliance to remain undetected. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the City. Questioned Costs There were no questioned costs identified.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP1096 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Each entity that accepts federal money must comply with 2 CFR 300.318, which requires each entity to have their own documented procurement procedures. The City provided a procurement policy from Title II of an employee manual that did not fully satisfy the standards of 2 CFR 200.318. The employee manual was adopted in 2004. The COVID-19 - Coronavirus State and Local Fiscal Recovery Funds were used to pay for engineering services in the amount of $301,000. These services were not publicly bid even though the dollar amount of the services exceeds the simplified acquisition threshold. 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 done by checking the Excluded Parties List System (EPLS), collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The City included suspension and debarment certifications with the agreements with many of the vendors who participated in the activities funded by the SLFRF funds. The City also checked the EPLS for some vendors. Evidence of compliance with the suspension and debarment verification requirements was not provided for two of four vendors selected for suspension and debarment testing. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (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. . . . (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 the contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you 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 did not have adequate internal controls over procurement and suspension and debarment. The City had not adopted a formal or informal policy for procurement that meets the requirements of 2 CFR 300.318. The City did not apply its procedures over suspension and debarment uniformly with one vendor not tested for suspension and debarment due to the specific aspects of the City's grant plan that the vendor was assigned to. Effect Without establishing effective internal controls over procurement and suspension and debarment, the City cannot ensure free and open competition or that the vendors paid with federal funds are eligible to participate in federal programs and might allow for payments to suspended or debarred parties that would be unallowable. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could potentially result in the loss of future funding to the City. Recommendation We recommended that management of the City establish a formal policy on procurement that meets the standards of 2 CFR 200.318 and develop effective internal controls and procedures to ensure that all vendors in which expenditures exceed $25,000 are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring 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): SLFRP1096 Compliance Requirement: Subrecipient Monitoring Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Subrecipients associated with the City's Non-profit, Affordable Housing, and Homeless Initiatives activities funded by the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds were required to submit reports on program activities either quarterly or monthly. The City did not have adequate internal controls in place designed to ensure that these reports were reviewed. Responsibility for reviewing these reports rested primarily with one employee. For two of three subrecipients tested, we were not able to determine that there was a second employee involved that would ensure that the reports submitted by the subrecipients were reviewed by the City. 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). . . ." 2 CFR 200.332 states: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and include the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward notification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program related matters; and (2) Performing on-site reviews of the subrecipient's program operations. (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations." Cause A system of internal controls to include oversite and review of the quarterly or monthly reports prepared by the subrecipients was not in place. One individual was primarily responsible for reviewing the subrecipient reports. Effect Not having procedures in place for oversite and review of the monitoring reports could lead to noncompliance with the requirements for subrecipient monitoring. 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. INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls to include oversite and review to ensure that the subrecipient report reviews are reviewed/approved by a second party. 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 the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0727, 2024 Compliance Requirement Affected: Suspension and Debarment Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Physical evidence that the County ensured vendor was not suspended or debarred was not retained. Questioned Costs: None. Context: For two of two transactions tested for suspension and debarment, the County did not have documentation that the verification was done. Cause: The County does not have policies or procedures in place to ensure proper evidence with compliance requirements are retained. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction. Repeat Finding: Yes, Finding 2023-0011. Recommendation: It is recommended that the County ensure properly language related to suspension and debarment is included in the contract, or other records are kept on file to support a verification was done. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2405MN5MAP, 2405MN5ADM, 2401MNFOST Federal Award Identification Number and Year: 2405MN5MAP, 2405MN5ADM, 2401MNFOST, 2024 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2024 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2023-005 Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2405MN5MAP, 2405MN5ADM, 2401MNFOST Federal Award Identification Number and Year: 2405MN5MAP, 2405MN5ADM, 2401MNFOST, 2024 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2024 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2023-005 Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2401MNFOST Federal Award Identification Number and Year: 2401MNFOST, 2024 Compliance Requirement Affected: Reporting Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: No formal evidence of review of the foster care report was kept on file. Questioned Costs: None. Context: State system does not have the ability to indicate who reviewed the report, and formal evidence of review was not retained. Cause: The County does not have policies or procedures in place to ensure review was taking place. Effect: The County could be reporting inaccurate information. Repeat Finding: Yes, Finding 2023-008. Recommendation: It is recommended that the County implement procedures to review the foster care report and retain evidence of the review. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to review the foster care report and retain evidence of the review on file.