FINDING 2023-004 Subject: Water and Waste Disposal Systems for Rural Communities - Equipment and Real Property Management Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include the information listed below, is to be maintained for assets purchased that exceed the Town's capitalization threshold. In addition, a physical inventory of all capital assets should be completed at least every two years. Capital Asset Listing Information A description of the property. A serial number or other identification number. The source of funding for the property (including the federal award identification number (FAIN)). Who holds title. The acquisition date. Cost of the property. Percentage of federal participation in the project costs for the federal award under which the property was acquired. The location. Use and condition of the property. The Town purchased one asset, totaling $477,750, which exceeded the Town's capitalization threshold. The asset was determined not to have been recorded in property records, nor was the asset on the inventory listing. Additionally, the Town did not complete a capital asset inventory every two years as required. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Clerk-Treasurer was new to the position as of January 1, 2024. The former Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. The Town contracted with outside engineers to manage the compliance requirement, and there was no documentation that an inventory of capital assets had been completed. Additionally, the provided capital asset listing did not include the asset in question. Lastly, the capital asset listing included items that were under the capital asset threshold in the Town's Capital Asset Policy. INDIANA STATE BOARD OF ACCOUNTS 23 TOWN OF FRANKTON 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, a capital asset purchased with federal funds was not properly recorded in a capital asset ledger, and a physical inventory was not performed. Noncompliance with the provisions of federal regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure capital assets purchased with federal funds are included on a capital asset ledger and that a physical inventory is performed every two years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): CY 2021; TRSW221148 Pass-Through Agency: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town elected to receive the standard revenue loss allowance, allowing the Town to claim its total direct State and Local Fiscal Recovery Funds (SLFRF) allocation of $416,087 as revenue loss to use for government services. As such, all SLFRF program funds to date were expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. The Town also received $1,428,334 in State Water Infrastructure Fund (SWIF) distributions which were funded with SLFRF dollars and were subject to the suspension and debarment requirements. INDIANA STATE BOARD OF ACCOUNTS 24 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (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. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions for revenue replacement. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements, the Town stated that it did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Six covered transactions, totaling $1,652,832, to three different vendors for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds were identified. Each transaction was examined to determine whether the Town verified the suspension and debarment status prior to payment. The Town had not verified the vendor's suspension and debarment status for any of the six covered transactions prior to issuing payment. Description Amount Stormwater drain installation (4 transactions, 1 vendor) $ 1 ,540,011 Police Cars (1 transaction, 1 vendor) 85,140 Equipment for police cars (1 transaction, 1 vendor) 27,681 Covered Transactions Tested Additionally, the Town had one agreement subject to the Buy America Build America (BABA) provisions. The Town could not provide documentation that procedures were performed to ensure the Buy America domestic preference provisions were included in either agreement nor was a BABA waiver obtained. The lack of internal controls and noncompliance were systematic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 25 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 184.4 states in part: "(a) Applicability of Buy America Preference to infrastructure projects. The Buy America Preference applies to Federal awards where funds are appropriated or otherwise made available for infrastructure projects in the United States, regardless of whether infrastructure is the primary purpose of the Federal award. (b) Including the Buy America Preference in Federal awards. All Federal awards with infrastructure projects must include the Buy America Preference in the terms and conditions. The Buy America Preference must be included in all subawards, contracts, and purchase orders for the work performed, or products supplied under the Federal award. . . ." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Clerk-Treasurer was new to the position as of January 1, 2024. The former Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. The Town contracted with outside engineers to manage the compliance requirement, and there was no documentation that BABA provisions or a waiver was obtained for the contracts nor that they included a suspension or debarment clause. Lastly, documentation that vendors were not suspended or debarred was not provided for review. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. In addition, the BABA provisions were not appropriately included in infrastructure projects. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Additionally, 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 Town. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 26 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the Town strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. In addition, we recommended that the Town ensure all applicable contracts contain the required BABA provisions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): CY 2021; TRSW221148 Pass-Through Agency: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town elected to receive the standard revenue loss allowance, allowing the Town to claim its total direct State and Local Fiscal Recovery Funds (SLFRF) allocation of $416,087 as revenue loss to use for government services. As such, all SLFRF program funds to date were expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. The Town also received $1,428,334 in State Water Infrastructure Fund (SWIF) distributions which were funded with SLFRF dollars and were subject to the suspension and debarment requirements. INDIANA STATE BOARD OF ACCOUNTS 24 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (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. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions for revenue replacement. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements, the Town stated that it did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Six covered transactions, totaling $1,652,832, to three different vendors for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds were identified. Each transaction was examined to determine whether the Town verified the suspension and debarment status prior to payment. The Town had not verified the vendor's suspension and debarment status for any of the six covered transactions prior to issuing payment. Description Amount Stormwater drain installation (4 transactions, 1 vendor) $ 1 ,540,011 Police Cars (1 transaction, 1 vendor) 85,140 Equipment for police cars (1 transaction, 1 vendor) 27,681 Covered Transactions Tested Additionally, the Town had one agreement subject to the Buy America Build America (BABA) provisions. The Town could not provide documentation that procedures were performed to ensure the Buy America domestic preference provisions were included in either agreement nor was a BABA waiver obtained. The lack of internal controls and noncompliance were systematic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 25 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 184.4 states in part: "(a) Applicability of Buy America Preference to infrastructure projects. The Buy America Preference applies to Federal awards where funds are appropriated or otherwise made available for infrastructure projects in the United States, regardless of whether infrastructure is the primary purpose of the Federal award. (b) Including the Buy America Preference in Federal awards. All Federal awards with infrastructure projects must include the Buy America Preference in the terms and conditions. The Buy America Preference must be included in all subawards, contracts, and purchase orders for the work performed, or products supplied under the Federal award. . . ." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Clerk-Treasurer was new to the position as of January 1, 2024. The former Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. The Town contracted with outside engineers to manage the compliance requirement, and there was no documentation that BABA provisions or a waiver was obtained for the contracts nor that they included a suspension or debarment clause. Lastly, documentation that vendors were not suspended or debarred was not provided for review. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. In addition, the BABA provisions were not appropriately included in infrastructure projects. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Additionally, 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 Town. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 26 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the Town strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. In addition, we recommended that the Town ensure all applicable contracts contain the required BABA provisions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2021 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context Recipients of State and Local Fiscal Recovery Funds (SLFRF) grants are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The Town was classified as a Tier 5 auditee - a metropolitan city with a population below 250,000 residents which received less than $10 million in SLFRF funding. Tier 5 auditees are required to submit an annual P&E report due in April of each year. The Town was required to file an annual P&E report on April 30, 2023. The report was to cover the period of April 1, 2022 to March 31, 2023. The Town presented this report for audit; however, there were no documented internal controls in place over the Reporting compliance requirement. The lack of internal controls was a systemic issue during 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 27 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls over the P&E reports was not designed by management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Town had a systemic lack of internal controls which resulted in the lack of internal controls over the annual P&E report. 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, the Town did not complete a required report, and the Treasury does not have information on how the Town is spending its funding. 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 Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management design and implement a proper system of internal controls, including policies and procedures to ensure that the Town provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 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): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is 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 did not obtain price or rate quotes for the one vendor tested that was less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contracts 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. Due to the U.S. Department of the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to covered transactions. A population of nine covered transactions for goods or services were paid from SLFRF award funds during the audit period. A sample of three transactions were selected for testing. Of the three transactions tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of effective internal controls and noncompliance were isolated to the small purchase noted above. 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. . . . INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The system of internal controls as established by management of the City was not effective at ensuring all required aspects of a procurement policy were included and that small purchases adhered to the procurement requirements. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure their policy includes all the necessary elements and that the detailed history of procurement including the method utilized are retained for audit. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended management of the City establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the City adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Department of Homeland Security, State of Iowa Homeland Security & Emergency Management, 97.039, DR‐4421‐0046 & DR‐4483‐0013 Hazard Mitigation Grant Program Reporting 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. Condition: In three of three quarterly reports tested, we noted the Cooperative improperly excluded information on the total funds expended to date lines for the federal, state, local and total categories. a) The DR‐4421 quarterly report ending June 30, 2023 improperly excluded total expenditures incurred to date in the amount of $43,258. b) The DR‐4421 quarterly report ending September 30, 2023 improperly excluded total expenditures incurred to date in the amount of $62,217. c) The DR‐4483 quarterly report ending September 30, 2023 improperly excluded expenditures incurred to date in the amount of $61,575. Cause: The Cooperative’s independent review process over the quarterly performance reports did not identify the improperly excluded expenditures on the report. Effect: Lack of compliance with designed internal controls over reporting could result in the Cooperative 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 Cooperative review internal control procedures over reporting to ensure reports are submitted with all required information. Views of Responsible Officials: Management agrees with the finding.
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 Numbers): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 16 UNION COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County did not have any policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. A population of two covered transactions, totaling $799,902, that equaled or exceeded $25,000 paid from SLFRF funds were identified. Both covered transactions were selected for testing. For each of the transactions, the County did not verify the vendor's suspension or debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. 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 had not designed or implemented policies and procedures to verity that contractors were not suspended or debarred, or otherwise excluded from participating in federal programs prior to entering into covered transactions using SLFRF funds. INDIANA STATE BOARD OF ACCOUNTS 17 UNION COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the County could not ensure contractors. The County could not ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover the funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended, debarred, or otherwise excluded prior to entering into any contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report
FINDING 2023-001 Subject: Formula Grants for Rural Areas and Tribal Transit Program - Procurement and Suspension and Debarment Federal Agency: Department of Transportation Federal Program: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listings Number: 20.509 Federal Award Numbers and Years (or Other Identifying Numbers): DES1804006O, 18039060 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF MARION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Condition and Context Prior to entering into subawards and covered transactions with Formula Grants for Rural Areas and Tribal Transit Program award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs Exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Two covered transactions for goods or services that equaled or exceeded $25,000 paid from Formula Grants for Rural Areas and Tribal Transit Program funds during the audit period were identified. Both covered transactions, totaling $75,580, were examined to determine whether the City verified the suspension and debarment status of each vendor prior to payment. The City had established the following procedures: The City Controller searches the SAM website for vendors the City enters into a covered transaction with over $25,000. The results are printed and signed. The printed results are then provided to the Transportation Director for his review and signature. In addition, a debarment and suspension certification from the prospective third-party contractor is collected or a clause is included in the third-party contract regarding disclosure which is reviewed and approved by the Board of Public Works and Safety. However, for both covered transactions, the City did not follow their procedures as outlined above and thus did not verify the vendors' suspension and debarment status prior to payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF MARION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls and to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any contracts. We also recommended strengthening its policies and procedures to ensure that documentation is kept and all covered transactions are verified. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-003 Assistance Listing Number: 14.228 Program Title: Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii Federal Grantor: U.S. Department of Housing and Urban Development Pass-Through Agency: Wisconsin Department of Adminstration Award Number / Year: 20-27 / 2023 Repeat Finding: 2022-003 Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition/Context: One of the two reports selected for testing were not independently reviewed before submission. The sample is not statistically valid. Cause: The City did not have internal control procedures in place requiring an independent person to review all reports before submission to ensure accuracy and timeliness. Questioned Costs: None noted. Effect: Reports submitted could contain errors. Recommendation: The City should review its internal control procedures to ensure there are proper review and approval processes over completeness and accuracy of reports before submissions to federal agencies Management's Response: Upon start of employment of a new City Administrator/Treasurer on October 9, 2023, that position employee will be reviewing such reports and financial documents on a regular basis as part of his job duties.
FINDING 2023-001 Information on the federal program: Subject: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii - Internal Controls Federal Agency: Department of Housing and Urban Development Assistance Listing Number: 14.228 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The City's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: We noted that for the two semi-annual reports selected for testing, the City did not perform a documented review and approval of the reporting package prepared by the City’s consultant before the submission of the report. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the City implement a documented, formal review of the semi-annual reports before they are submitted for reimbursement. Views of Responsible Officials and Planned Corrective Actions: For the views of the responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Information on the federal program: Subject: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii - Internal Controls Federal Agency: Department of Housing and Urban Development Assistance Listing Number: 14.228 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The City's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: We noted that for the payroll periods sampled for wage-rate testing, the City did not perform a periodic, documented review and approval of the performance and results of wage rate testing performed by the City’s consultant. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the City implement a documented, formal review of the wage-rate testing done by the contracted consulting company. Views of Responsible Officials and Planned Corrective Actions: For the views of the responsible officials, refer to the Corrective Action Plan that is part of this report.
HVC Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 / 14.879 Federal Award Identification Number and Year: OK002 (various funding increments active during period 1/1/23-12/31/23) Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance. Other Matters. Criteria: As a condition of admission or continued occupancy, the PHA must 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, 5.601 et seq., 5.609, 960.253, 960.255 and 960.259). 24 CFR section 960.259 states that for both family income examinations and reexaminations, the PHA must 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 sections 5.601 et seq., and 24 CFR sections 960.253, 960.255, and 960.259 state that the Authority must 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 5.230, 5.609, and 960.259 state that as a condition of admission or continued occupancy, the Authority must require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility. 2 CFR 200.303 requires the Authority to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in accordance with federal statutes, regulations, and the terms and conditions of the award. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure that eligibility requirements were being met. Questioned costs: Unknown Context: Testing of 40 tenant files resulted in: 1 HUD-50058 form did not properly include a disability allowance. 2 HUD-50058 recertifications were processed late. OKLAHOMA CITY HOUSING AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2023 (66) Section III – Federal Award Findings and Questioned Costs (Continued) 2023 - 001 – HCVP Eligibility (Continued) Cause: The Authority did not follow established procedures as documented in its administrative plan to ensure that eligibility requirements were being met. Effect: This could have a direct impact on the HAP calculation. The Authority is not in compliance with program requirements over eligibility. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding numbers were 2022-001, 2021-002 and 2020-003. Recommendation: We recommend management to enhance controls and policies to ensure compliance with eligibility requirements. Additional training for housing specialists would also improve accuracy. View of Responsible Officials: There is no disagreement with the audit finding.
HVC Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 / 14.879 Federal Award Identification Number and Year: OK002 (various funding increments active during period 1/1/23-12/31/23) Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance. Other Matters. Criteria: As a condition of admission or continued occupancy, the PHA must 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, 5.601 et seq., 5.609, 960.253, 960.255 and 960.259). 24 CFR section 960.259 states that for both family income examinations and reexaminations, the PHA must 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 sections 5.601 et seq., and 24 CFR sections 960.253, 960.255, and 960.259 state that the Authority must 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 5.230, 5.609, and 960.259 state that as a condition of admission or continued occupancy, the Authority must require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility. 2 CFR 200.303 requires the Authority to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in accordance with federal statutes, regulations, and the terms and conditions of the award. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure that eligibility requirements were being met. Questioned costs: Unknown Context: Testing of 40 tenant files resulted in: 1 HUD-50058 form did not properly include a disability allowance. 2 HUD-50058 recertifications were processed late. OKLAHOMA CITY HOUSING AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2023 (66) Section III – Federal Award Findings and Questioned Costs (Continued) 2023 - 001 – HCVP Eligibility (Continued) Cause: The Authority did not follow established procedures as documented in its administrative plan to ensure that eligibility requirements were being met. Effect: This could have a direct impact on the HAP calculation. The Authority is not in compliance with program requirements over eligibility. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding numbers were 2022-001, 2021-002 and 2020-003. Recommendation: We recommend management to enhance controls and policies to ensure compliance with eligibility requirements. Additional training for housing specialists would also improve accuracy. View of Responsible Officials: There is no disagreement with the audit finding.
HVC Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 / 14.879 Federal Award Identification Number and Year: OK002 (various funding increments active during period 1/1/23-12/31/23) Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance. Other Matters. Criteria: As a condition of admission or continued occupancy, the PHA must 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, 5.601 et seq., 5.609, 960.253, 960.255 and 960.259). 24 CFR section 960.259 states that for both family income examinations and reexaminations, the PHA must 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 sections 5.601 et seq., and 24 CFR sections 960.253, 960.255, and 960.259 state that the Authority must 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 5.230, 5.609, and 960.259 state that as a condition of admission or continued occupancy, the Authority must require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility. 2 CFR 200.303 requires the Authority to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in accordance with federal statutes, regulations, and the terms and conditions of the award. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure that eligibility requirements were being met. Questioned costs: Unknown Context: Testing of 40 tenant files resulted in: 1 HUD-50058 form did not properly include a disability allowance. 2 HUD-50058 recertifications were processed late. OKLAHOMA CITY HOUSING AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2023 (66) Section III – Federal Award Findings and Questioned Costs (Continued) 2023 - 001 – HCVP Eligibility (Continued) Cause: The Authority did not follow established procedures as documented in its administrative plan to ensure that eligibility requirements were being met. Effect: This could have a direct impact on the HAP calculation. The Authority is not in compliance with program requirements over eligibility. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding numbers were 2022-001, 2021-002 and 2020-003. Recommendation: We recommend management to enhance controls and policies to ensure compliance with eligibility requirements. Additional training for housing specialists would also improve accuracy. View of Responsible Officials: There is no disagreement with the audit finding.
HVC P Rent Reasonableness Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 / 14.879 Federal Award Identification Number and Year: OK002 (various funding increments active during period 1/1/23-12/31/23) Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance. Other Matters. Criteria: The PHA must determine that the rent to owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract: (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a five percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). OKLAHOMA CITY HOUSING AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2023 (67) Section III – Federal Award Findings and Questioned Costs (Continued) 2023 - 002 – HCVP Rent Reasonableness (Continued) Criteria (Continued): 2 CFR 200.303 requires the Authority to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in accordance with federal statutes, regulations, and the terms and conditions of the award. Condition: During testing, it was noted that the Authority did not have adequate internal controls designed to ensure that rent reasonableness requirements were being met. Questioned costs: None Context: During the testing of 40 new tenant files, one instance was noted where the Authority approved a contract rent higher than the amount determined to be reasonable. Cause: The Authority does not have controls in place to ensure it is meeting reasonable rent requirements set by HUD. Effect: The Authority is not in compliance with program requirements over reasonable rent. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding numbers were 2022-003. Recommendation: We recommend management to enhance controls over the recertification and rent change process to ensure determination of reasonable rent is performed prior to processing of the move in. View of Responsible Officials: There is no disagreement with the audit finding. The Authority made necessary corrections and recoupment of HAP during the process of this audit.
HVC P Rent Reasonableness Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 / 14.879 Federal Award Identification Number and Year: OK002 (various funding increments active during period 1/1/23-12/31/23) Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance. Other Matters. Criteria: The PHA must determine that the rent to owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract: (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a five percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). OKLAHOMA CITY HOUSING AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2023 (67) Section III – Federal Award Findings and Questioned Costs (Continued) 2023 - 002 – HCVP Rent Reasonableness (Continued) Criteria (Continued): 2 CFR 200.303 requires the Authority to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in accordance with federal statutes, regulations, and the terms and conditions of the award. Condition: During testing, it was noted that the Authority did not have adequate internal controls designed to ensure that rent reasonableness requirements were being met. Questioned costs: None Context: During the testing of 40 new tenant files, one instance was noted where the Authority approved a contract rent higher than the amount determined to be reasonable. Cause: The Authority does not have controls in place to ensure it is meeting reasonable rent requirements set by HUD. Effect: The Authority is not in compliance with program requirements over reasonable rent. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding numbers were 2022-003. Recommendation: We recommend management to enhance controls over the recertification and rent change process to ensure determination of reasonable rent is performed prior to processing of the move in. View of Responsible Officials: There is no disagreement with the audit finding. The Authority made necessary corrections and recoupment of HAP during the process of this audit.
HVC P Rent Reasonableness Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 / 14.879 Federal Award Identification Number and Year: OK002 (various funding increments active during period 1/1/23-12/31/23) Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance. Other Matters. Criteria: The PHA must determine that the rent to owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract: (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a five percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). OKLAHOMA CITY HOUSING AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED DECEMBER 31, 2023 (67) Section III – Federal Award Findings and Questioned Costs (Continued) 2023 - 002 – HCVP Rent Reasonableness (Continued) Criteria (Continued): 2 CFR 200.303 requires the Authority to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in accordance with federal statutes, regulations, and the terms and conditions of the award. Condition: During testing, it was noted that the Authority did not have adequate internal controls designed to ensure that rent reasonableness requirements were being met. Questioned costs: None Context: During the testing of 40 new tenant files, one instance was noted where the Authority approved a contract rent higher than the amount determined to be reasonable. Cause: The Authority does not have controls in place to ensure it is meeting reasonable rent requirements set by HUD. Effect: The Authority is not in compliance with program requirements over reasonable rent. Repeat Finding: The finding is a repeat of a finding in the immediate prior year. Prior year finding numbers were 2022-003. Recommendation: We recommend management to enhance controls over the recertification and rent change process to ensure determination of reasonable rent is performed prior to processing of the move in. View of Responsible Officials: There is no disagreement with the audit finding. The Authority made necessary corrections and recoupment of HAP during the process of this audit.
2023-003 Procurement Policy Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1052063; 2023 Pass-Through Agency: Minnesota Department of Transportation Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318 states that the non-federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform with applicable federal law and the standards identified in this regulation. Condition: Traverse County has written procurement policies; however, these policies do not include the required components in accordance with Title 2 U.S. Code of Federal Regulations §200.318. Questioned Costs: None Context: This issue was discovered during the audit of the major federal program; however, it impacts federal programs entity-wide. Written policies that reflect the specific components of federal regulations improve controls to ensure compliance with federal award requirements. Effect: Written policies and procedures that are not updated to reflect the federal procurement requirements could increase the risk of noncompliance with federal program requirements. Cause: Traverse County management was unaware the procurement policy did not include all the requirements. Recommendation: We recommend Traverse County include the specific components of the Uniform Guidance requirements in its written procurement policies and procedures. View of Responsible Official: Acknowledge
2023-004 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 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. Administrative program costs for Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance (DHS-2550) report and the Social Service Fund (DHS-2556) report on a quarterly basis. DHS provides reporting instructions including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested for activities allowed or unallowed and allowable costs/cost principles: • Three claims were included in the DHS-2550 and DHS-2556 reports as eligible expenditures but were not eligible for federal reimbursement. • For eleven timesheets tested, the payroll costs were allocated on an incorrect full-time equivalent (FTE) split, as the income maintenance and social services splits had been entered into the system inversely. Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the County implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reported incorrectly are corrected and resubmitted. View of Responsible Official: Acknowledge
2023-005 Reporting (DHS 2550 and 2556) Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Heath and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 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. Administrative program costs for Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance (DHS-2550) report and the Social Service Fund (DHS-2556) report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in a sample of quarterly reports tested: • In the DHS-2550 second and fourth quarter reports, salary reimbursements were reported as a reduction to income maintenance administrative overhead expenditures for “Salary and Fringe” and “Services and Charges” rather than as “Revenue Offset.” In the DHS-2556 second and fourth quarter reports, salary reimbursements were reported as reductions in payroll expenditures rather than miscellaneous revenue. • The social services department does not have a rental agreement in place to support the rent payments included in both the DHS-2550 and DHS-2556 second and fourth quarter reports. • In the DHS-2556 second quarter report, revenue was reported as Fees for Services rather than Intergovernmental Federal Revenue. • In both the DHS-2550 and DHS-2556 fourth quarter reports, expenditures were reported related to remodeling areas not used exclusively for income maintenance or social service programs instead of only reporting these areas' proportionate share of costs. Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over preparation of the quarterly reports were not sufficient to identify the reporting errors. Recommendation: We recommend Traverse County implement controls to ensure accurate reporting to DHS in accordance with federal program guidance and DHS instructions. We also recommend reports submitted incorrectly are corrected and resubmitted. View of Responsible Official: Acknowledge
2023-006 Local Collaborative Time Study (LCTS) Reporting (Cost Schedules DHS-3220.2) Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 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. For federal awards received from the Minnesota Department of Human Services (DHS), the County should establish and maintain internal control to provide assurance that program reports submitted to DHS are completed in accordance with reporting instructions. As part of Traverse County’s reporting requirements, the County submits the Local Collaborative Time Study (LCTS) Corrections Cost Schedules DHS-3220.2 on a quarterly basis. Condition: The following exceptions were noted in the sample of the Corrections Cost Schedules DHS-3220.2 tested: • The County reported rent payments in the second and fourth quarters, but the County paid the rent in the third quarter of 2023 and the first quarter of 2024, respectively. • Reported direct labor and benefit expenditures in the second and fourth quarters were estimated based on a portion of the individuals’ annual salary rather than actual salaries and benefits in the general ledger. • The County reported only 27 percent of expenditures incurred in the second quarter and 30 percent of expenditures incurred in the fourth quarter. Questioned Costs: None Context: DHS relies on accurate reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. Revised reports have since been submitted by the County to correct for the errors identified in the audit. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: County staff indicated errors were due to lack of oversight and detailed review of costs being included or excluded from the quarterly reports submitted to DHS. Recommendation: We recommend Traverse County implement detailed supervisory review procedures to ensure accurate reporting to DHS in accordance with federal program guidance and DHS instructions. View of Responsible Official: Acknowledge
2023-007 Local Collaborative Time Study (LCTS) Reporting (Cost Schedules DHS-3220.1 and DHS-3220.2) Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 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. As part of Traverse County’s Local Collaborative Time Study (LCTS) reporting requirements for Schools (DHS-3220.1) and Corrections (DHS-3220.2), LCTS fiscal site contacts are required to verify that the information on the LCTS Fiscal and Cost Schedule is accurate and that it complies with all guidelines set forth in the LCTS Cost Schedule Instructions described in DHS Bulletin #16-32-04 – Local Collaborative Time Study (LCTS) Fiscal Operations. It also states that the County’s LCTS Fiscal Reporting and Payment Agent is required to review all cost schedules from participating agencies. Condition: No documentation was maintained to support that the two Cost Schedules DHS-3220.1 and the two Cost Schedules DHS-3220.2 tested in the sample were reviewed by the County’s LCTS Fiscal Reporting and Payment Agent. Questioned Costs: None Context: The Cost Schedules DHS-3220 are submitted quarterly by each member of a collaborative to DHS for reimbursement of LCTS money, which is reimbursed to the County with federal Medical Assistance Program funds. The Traverse County Social Services Department acts as the LCTS Fiscal Reporting and Payment Agent for the local collaborative in Traverse County. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Lack of a review process increases the risk that reports reports will not be submitted as required or accurate. Cause: Staff from the County’s Social Services Department indicated they were not aware of the review requirements for the quarterly reports. Recommendation: We recommend the County implement procedures to ensure the cost schedules are reviewed and evidence of the review is retained. View of Responsible Official: Acknowledge
FINDING 2023-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 HOWARD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contract for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of more than $10 million in the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funding. As such, the initial P&E report, covering three calendar quarters from March 3, 2021 to December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent quarterly reports are to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The Deputy County Auditor prepared the quarterly reports, and the County Auditor reviewed the reports; however, the internal control was not effective and did not detect and allow correction of material misstatements prior to submission. Two of the four quarterly reports submitted during the audit period were selected for testing. For the two reports tested, all activity for the reporting period was not included, information submitted was not supported by the County's records, and the reports were not fairly presented. Errors identified included the following: Quarter 1 report (January 1, 2023 to March 31, 2023) The Total Cumulative Obligations were understated by $2,937. The Current Period and Total Cumulative Expenditures were overstated by $62. Quarter 3 report (July 1, 2023 to September 30, 2023) The Total Cumulative Obligations were understated by $118,025. The Current Period Expenditures were understated by $56,781. The Total Cumulative Expenditures were understated by $147,930. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 14 HOWARD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds. . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." Cause Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. These errors were due to not all expenditures being included in the P&E reports ran for the time frame. Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the County could not ensure that the P&E reports submitted were accurate. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures, to ensure that the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasurer Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Numbers): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Prior to entering into subawards and covered transactions with the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) awards funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expended to equal or exceed $25,000. 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's policies related to SLFRF suspension and debarment requirement included checking the EPLS for vendor suspension and debarment. Of the 16 covered transactions, totaling $3,039,637.60, identified that were paid from the SLFRF funds during the audit period, 3 were selected for testing to verify the County followed its procedures related to suspension and debarment. Of the 3 covered transaction tested, 1 did not follow the County's procedures as outlined above. The 1 covered transaction, totaling $47,283, did not include the appropriate provisions in the contracts nor did the County require a certification or check the EPLS to ensure the entity was not suspended or debarred prior to making payment. The lack of internal controls and noncompliance were isolated to the transaction noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.214 states: "Non-federal entities contractors are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." INDIANA STATE BOARD OF ACCOUNTS 16 HOWARD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The system of internal controls as established by management of the County was not properly implemented to ensure that the policies and procedures in place related to suspension and debarment were appropriately followed. The County did not verify for one covered transaction identified in testing that the entity was not suspended or debarred prior to entering into the covered transaction. Effect Without the proper implementation of an effectively designed system of internal controls, the County could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal 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 the County strengthen its system of internal controls to ensure vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required quarterly or annually to 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 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 Town was classified as a Non-Entitlement Unit with a population below 250,000 residents that are allocated less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the Town's P&E report, covering the period from April 1, 2022 to March 31, 2023, was required to be submitted to the Treasury by April 30, 2023. The Town timely submitted one P&E report during the audit period; however, the report was submitted without a review or oversight process in place to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The cumulative expenditures and current period expenditures reported were both incorrect. The Town did not have any expenditures prior to March 31, 2023; however, the Town reported the full amount received for the grant of $376,654 for both cumulative expenditures and current period expenditures. The lack of internal controls and noncompliance were isolated to the one annual P&E report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." The Indiana State Board of Accounts (SBOA) is required under Indiana Code 5-11-1-27(e) to define the acceptable minimum level of internal control standards. To provide clarifying guidance, the State Examiner compiled the standards contained in the manual, Uniform Internal Control Standards for Indiana Political Subdivisions. All political subdivisions subject to audit by SBOA are expected to adhere to these standards. The standards include adequate control activities. According to this manual: "Control activities are the actions and tools established through policies and procedures that help to detect, prevent, or reduce the identified risks that interfere with the achievement of objectives. Detection activities are designed to identify unfavorable events in a timely manner whereas prevention activities are designed to deter the occurrence of an unfavorable event. Examples of these activities include reconciliations, authorizations, approval processes, performance reviews, and verification processes. An integral part of the control activity component is segregation of duties. . . . There is an expectation of segregation of duties. If compensating controls are necessary, documentation should exist to identify both the areas where segregation of duties are not feasible or practical and the compensating controls implemented to mitigate the risk. . . ." Cause A proper system of internal controls over P&E reports was not implemented by the management of the Town to ensure that complete and accurate information related to the SLFRF awards was provided to the Treasury. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Town incorrectly reported the correct current and cumulative expenditures due to misunderstanding the line item requirement. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, errors, as identified in the Condition and Context, occurred, and inaccurate information was provided to the Treasury. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. 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 Town design and implement a proper system of internal controls that would provide for segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the Town provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-003 Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP1349; 2021 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain internal control over federal programs that provides reasonable assurance that the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: For three covered transactions tested, the County did not perform the verification for suspended or debarred vendors prior to entering into the covered transactions Questioned Costs: None Context: There were ten covered transactions for this grant during 2023. In addition, none of the vendors tested were listed as suspended or debarred on SAM.gov at the time of the audit. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, or debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County does not have a procedure to verify or maintain search results to determine whether vendors are suspended or debarred prior to entering into covered transactions. Recommendation: We recommend the County verify and maintain documentation to demonstrate that vendors were not debarred, suspended, or otherwise excluded from conducting business with the County; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur
FINDING 2023-001 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): 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 LAGRANGE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Condition and Context The County elected to receive the standard revenue loss allowance, allowing the County to claim its total State and Local Fiscal Recovery Funds (SLFRF) allocation of $7,694,555 as revenue loss to use for government services. As such, all SLFRF program funds were expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the County was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the County's policies and procedures related to suspension and debarment requirements, the County disclosed its process for the County Auditor to ensure that the agreements or contracts include language related to suspension and debarment. Four covered transactions for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were selected for testing. Each transaction was examined to determine whether the County verified the suspension and debarment status of the vendor prior to payment. The first covered transaction, in the amount of $304,263, was made to a contractor for the purchase of three building generators. While the contract was reviewed and approved by a County official, no suspension or debarment clause was present in the contract. As such, the County did not verify the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities prior to payment. The second covered transaction, in the amount of $56,338, was made for the purchase of the commissioner's room audio video upgrades. While the contract was reviewed and approved by a County official, no suspension or debarment clause was present in the contract. As such, the County did not verify the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities prior to payment. The third covered transaction, in the amount of $126,737, was made for the construction of a 4-H fairgrounds home. The contract was reviewed and approved by a County official and included a suspension or debarment clause. The fourth covered transaction, in the amount of $27,661, was made for the construction of a new park pavilion. While the contract was reviewed and approved by a County official, no suspension or debarment clause was present in the contract. As such, the County did not verify the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities prior to payment. INDIANA STATE BOARD OF ACCOUNTS 14 LAGRANGE 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 intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause After the last audit, the County established procedures to include a suspension and debarment clause in agreements or contracts. However, the County did not amend agreements or contracts entered into prior to the implementation of this policy. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County strengthen its system of internal controls to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended, debarred, or otherwise excluded from participating in federal programs prior to entering into any contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002 Suspension and Debarment Federal agency: U.S. Department of Labor Federal program title: H1-B Job Training Grants CFDA Number: 17.268 Award Period: March 1, 2020 - February 29, 2024 - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria: Uniform Grant Guidance requires compliance with the provisions of internal controls. 2 CFR Part 200.303 states that recipients of Federal funds are required to establish and maintain effective internal control over the Federal awards to provide reasonable assurance that the recipient of Federal funds is following Federal statutes, regulations and the terms and conditions of the Federal award. Argentum should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Argentum did not properly obtain suspension and debarment certification or check the System for Award Management website before entering into a transaction for 1 of 5 covered transactions tested. Questioned costs: None Cause: Adequate procedures were not in place to verify if covered transactions with Argentum related to the federal program in excess of the threshold are not suspended, debarred, or otherwise excluded from doing business. Effect: Noncompliance with the federal award program's suspension and debarment compliance requirements could occur and not be detected and corrected timely. Repeat Finding: Yes Recommendation: Proper procedures must be implemented and documented to ensure all covered transactions with Argentum have not been suspended or debarred or otherwise excluded from doing business, prior to procuring their services. In order to verify this, program management should either obtain debarment certifications from covered contractors or check the System for Award Management website in a timely manner. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.
FINDING 2023-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF BUTLER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds. As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The City submitted one P&E report during the audit period; however, the report was submitted without a review or oversight process in place to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The cumulative obligations and current period obligations were understated by $104,988. The cumulative obligations and current period obligations reported was the total amount of grant funds expended through December 31, 2022, instead of the amount of funds expended through March 31, 2023. 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for com-piling 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, . . ." INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF BUTLER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls over the P&E report was not implemented by the management of the City to ensure that complete and accurate information related to the SLFRF awards was provided to the Treasury. The City incorrectly reported the cumulative obligations and current period obligations due to abstracting and reporting data through the end of the year, instead of the end of March 2023 as required. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, errors, as identified in the Condition and Context, occurred, and inaccurate information was provided to the Treasury. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls that would provide for segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City abstracts and reports on the correct time frame for each report submitted to provide the Treasury with complete and accurate information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE
FINDING 2023-004 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 Years (or Other Identifying Number): 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 21 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. 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 (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 any policies or procedures in place related to the suspension and debarment requirements. A population of three covered transactions, totaling $145,166, that equaled or exceeded $25,000 paid from SLFRF funds were identified. All three covered transactions were selected for testing. For each of the three transactions, the County did not verify the vendors' suspension or debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 22 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County's purchasing policy does not include procedures to verify suspension and debarment status for covered transactions it intends to pay with federal funds. The County was not aware of the suspension and debarment requirements at the time the covered transactions were entered into. Furthermore, due to the timing of the prior audit completion, corrective actions, as outlined in the County's corrective action plan for item 2022-003, could not be implemented in time to correct the noncompliance for this audit period. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls, including strengthening its policies and procedures, to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 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): 2023 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 2022-004. INDIANA STATE BOARD OF ACCOUNTS 23 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted one P&E report during the audit period; however, the report was submitted without a review or oversight process in place to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The cumulative obligations and expenditures and current period obligations and expenditures were incorrectly reported. The cumulative obligations and expenditures and current period obligations reported was the total amount of grant funds received to date instead of actual funds obligated and expended. The current period expenditures reported equaled the total expenditures for 2022, rather than expenditures that occurred during the reporting period of April through December of 2022, and January through March of 2023. The lack of internal controls and the failure to maintain adequate supporting documentation was isolated to the annual P&E report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." INDIANA STATE BOARD OF ACCOUNTS 24 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County's oversight process for filing the P&E report for the period of April 1, 2022 to March 31, 2023, did not detect errors. Furthermore, due to the timing of the prior audit completion and the P&E report submission due dates, corrective actions as outlined in the County's corrective action plan for item 2022-004 could not be implemented in time to correct the noncompliance for this audit period. 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 cumulative obligations and current period obligations properly when filing the P&E report for the period April 1, 2022 to March 31, 2023. 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 strengthen its system of internal controls to provide for a segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: COVID-19 - Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii- Reporting Federal Agency: Department of Housing and Urban Development Federal Programs: COVID-19 - Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii Assistance Listings Number: 14.228 Federal Award Number and Year (or Other Identifying Number): CV-CV1-233 Pass-Through Entity: Indiana Office of Community and Rural Affairs Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 25 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not in place at the County in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. The passthrough agency required the County to submit a CDBG-CV report on Jobs Retained. The County collected the required information via phone calls made by one individual who compiled the information and submitted the required CDBG-CV report on Jobs Retained for the grant program without a documented oversight or review process. Furthermore, supporting documentation for the report was not retained for audit. Due to the lack of supporting documentation, we were unable to determine the accuracy of the report submitted. The lack of internal controls and the failure to maintain adequate supporting documentation was isolated to the CDBG-CV Report on Jobs Retained report. 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 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause Management had not established a system of internal controls that would have ensured that adequate supporting documentation would have been maintained and made available for audit. 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, we could not determine the County's compliance with the CDBG-CV Report on Jobs Retained report. 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. INDIANA STATE BOARD OF ACCOUNTS 26 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County strengthen its system of internal controls to provide for a segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
United States Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance and 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 conditions of the federal award. Condition: During review of expenditure listings, three expenditures were claimed under the USDA Grant Program after the Center received an advancement of USDA loan funds for those same three expenditures. Cause: The Center did not have a formal review process in place over the USDA Grant expenditure listing and USDA loan advancement to ensure double dipping was not occurring. Effect: The Center received funding from two federal programs for the same expenditures. Questioned Costs: $43,354. Context/Sampling: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend management implement internal control procedures to include a preparer and reviewer over federal expenditure listings to ensure no double dipping occurs with federal programs. Views of Responsible Officials: Management agrees with the finding.
United States Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance and 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 conditions of the federal award. Condition: During review of expenditure listings, three expenditures were claimed under the USDA Grant Program after the Center received an advancement of USDA loan funds for those same three expenditures. Cause: The Center did not have a formal review process in place over the USDA Grant expenditure listing and USDA loan advancement to ensure double dipping was not occurring. Effect: The Center received funding from two federal programs for the same expenditures. Questioned Costs: $43,354. Context/Sampling: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend management implement internal control procedures to include a preparer and reviewer over federal expenditure listings to ensure no double dipping occurs with federal programs. Views of Responsible Officials: Management agrees with the finding.
FINDING 2023-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Suspension and Debarment Prior to entering into subawards and covered transactions with 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. Due to the U.S. Department of the Treasury's (Treasury) determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions. INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF PENDLETON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the Town, in order to review the procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the Town explained they were aware of the suspension and debarment requirements related to the SLFRF awards; however, the Town did not retain documentation of SAM.gov checks nor was a clause always included in a contract. A population of four covered transactions for goods or services, totaling $720,504, that equaled or exceeded $25,000 paid from SLFRF funds during the audit period was identified. A sample of two transactions, totaling $666,643, was selected for testing. For one of the two transactions, the Town did not verify the vendor's suspension and debarment status prior to payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Town was unable to provide documentation to demonstrate they checked SAM.gov to verify the contractor was not suspended or debarred. Although the Town verified the contractor's suspension and debarment status, no documentation was retained to document the search or results. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF PENDLETON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. In addition, we recommended strengthening policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The Town was classified as a Non-Entitlement Unit with a population below 250,000 residents that are allocated less than $10 million in Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the Town's P&E report, covering the period from April 1, 2022 to March 31, 2023, was required to be submitted to the Treasury by April 30, 2023. The Town timely submitted one P&E report during the audit period; however, the report was submitted without a review or oversight process in place to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The Town reported current expenditures of $33,325, which did not agree with the accounting records. The lack of internal controls and noncompliance were isolated to the one annual P&E report. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF PENDLETON 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." The Indiana State Board of Accounts (SBOA) is required under Indiana Code 5-11-1-27(e) to define the acceptable minimum level of internal control standards. To provide clarifying guidance, the State Examiner compiled the standards contained in the manual, Uniform Internal Control Standards for Indiana Political Subdivisions. All political subdivisions subject to audit by SBOA are expected to adhere to these standards. The standards include adequate control activities. According to this manual: "Control activities are the actions and tools established through policies and procedures that help to detect, prevent, or reduce the identified risks that interfere with the achievement of objectives. Detection activities are designed to identify unfavorable events in a timely manner whereas prevention activities are designed to deter the occurrence of an unfavorable event. Examples of these activities include reconciliations, authorizations, approval processes, performance reviews, and verification processes. An integral part of the control activity component is segregation of duties. . . . There is an expectation of segregation of duties. If compensating controls are necessary, documentation should exist to identify both the areas where segregation of duties are not feasible or practical and the compensating controls implemented to mitigate the risk. . . ." INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF PENDLETON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls over P&E reports was not implemented by the management of the Town to ensure that complete and accurate information related to the SLFRF awards was provided to the Treasury. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Town incorrectly reported the current expenditures due to misunderstanding the line-item requirement. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, errors, as identified in the Condition and Context, occurred and inaccurate information was provided to the Treasury. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. 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 Town design and implement a proper system of internal controls that would provide for segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the Town provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 20
FINDING 2023-001 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): FY 2023 Pass-Through Entity: Direct Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the County, in order to review the procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the County explained its process was for the Board of County Commissioner's Secretary to provide a list of vendors to the County Auditor's office. The County Auditor, or designee, then verified each vendor on the SAMs website to ensure they were not suspended, debarred, or otherwise excluded. A copy of the verification was retained in the County Auditor's files. A population of 13 covered transactions was identified, from which 5 were selected for testing. Of the 5 tested, the County did not have documentation that 3 of the vendors were verified to ensure they were not suspended, debarred, or otherwise excluded. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by the management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. For two of the vendors, their suspension and debarment status was not verified until 2024, which was after payment. For the other vendor, suspension and debarment was not verified as the County Auditor was unaware that it should have been for that vendor. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable and the funding agency could potentially recovery them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended the County strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 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): FR-2023-ILBC-00004 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Policy The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. INDIANA STATE BOARD OF ACCOUNTS 17 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is 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. One vendor was identified that fell within the small purchase threshold. Purchases for body cameras and associated equipment/accessories to the vendor totaled $117,144, of which $7,144 was paid from the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds received from the Indiana Department of Homeland Security. As a portion of the purchases to the vendor were paid with federal funds subject to procurement requirements, the entirety of purchases with the vendor was required to follow applicable procurement requirements. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the County 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. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 18 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 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): FY23 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 19 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement Policy The County did not have documented procurement procedures or policies reflecting applicable state or federal laws and regulations for procuring goods and services paid with federal funds. Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is 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. One vendor was identified that fell within the small purchase threshold, with total purchases of $33,100. Price or rate quotations were not obtained, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Simplified Acquisition Threshold When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the threshold the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. One vendor was identified that fell within the SAT, with total purchases of $213,734. Sealed bids or competitive proposals were not obtained, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. INDIANA STATE BOARD OF ACCOUNTS 20 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County did not have any policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded. A population of six covered transactions, totaling $470,435, that equaled or exceeded $25,000 paid from SLFRF award funds was identified. Four of the six covered transactions, totaling $312,745, were selected for testing. For each of the four transactions, the County did not verify the vendors' suspension or debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . INDIANA STATE BOARD OF ACCOUNTS 21 DECATUR COUNTY 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. . . . (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. INDIANA STATE BOARD OF ACCOUNTS 22 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: 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): FY23 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds. As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted one P&E report during the audit period; however, internal controls were not in place to prevent, or detect and correct, errors. As a result, the following errors were noted: The current period expenditures for 8 of 16 projects were understated by $635,748. In addition, current period expenditures for 1 of 16 projects was overstated by $29,767. The cumulative expenditures for 6 of 16 projects were understated by $285,748. In addition, cumulative expenditures for 1 of 16 projects was overstated by $29,767. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 23 DECATUR 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) . . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds. . . ." Cause A proper system of internal controls was not designed or implemented by management of the County to prevent and detect errors on the P&E report prior to submission. 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 expenditures and cumulative expenditures properly when filing the P&E report for the period April 1, 2022 to March 31, 2023. 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. INDIANA STATE BOARD OF ACCOUNTS 24 DECATUR COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County strengthen its system of internal controls to provide for a segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 25
CONDITION: During my review of the Borough of Ellwood City’s internal controls over federal awards, I noted that the Borough does not have formal written policies and procedures surrounding the management of their federal award funds. Although not all-inclusive, an example of some of the required polices would include written procedures for procurement, conflict of interest, and allowable costs. CRITERIA: Section 2 CFR 200.303 of the Uniform Guidance requires non-federal entities such as the Borough of Ellwood City to maintain effective internal controls over federal awards. In addition, the Uniform Guidance also recommends these internal controls follow guidance in Standards for Internal Control in the Federal Government (the Green Book), issued by the Comptroller General of the United States. EFFECT: The Borough of Ellwood City is not in compliance with Section 2 CFR 200.303 of the Uniform Guidance which requires non-federal entities to maintain effective internal controls over federal awards. QUESTIONED COST: None CAUSE: It was not readily determinable as to why the Borough of Ellwood City had not formally adopted written policies and procedures surrounding the management of their federal award funds. RECOMMENDATION: I recommend that the Borough of Ellwood City adopt the required written policies and procedures surrounding the management of federal award funds as prescribed by Section 2 CFR 200.303 of the Uniform Guidance. The focus of these policies and procedures should be to ensure that the Borough officials who are responsible for carrying out the objectives of the federal financial award understand 1) the federal statutes, regulations, and terms and conditions of the award, 2) how to evaluate and properly monitor compliance, and 3) the steps to take if noncompliance is identified. VIEWS OF RESPONSIBLE OFFICIALS: The Borough of Ellwood City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the Borough of Ellwood City’s internal controls over federal awards, I noted that the Borough does not have formal written policies and procedures surrounding the management of their federal award funds. Although not all-inclusive, an example of some of the required polices would include written procedures for procurement, conflict of interest, and allowable costs. CRITERIA: Section 2 CFR 200.303 of the Uniform Guidance requires non-federal entities such as the Borough of Ellwood City to maintain effective internal controls over federal awards. In addition, the Uniform Guidance also recommends these internal controls follow guidance in Standards for Internal Control in the Federal Government (the Green Book), issued by the Comptroller General of the United States. EFFECT: The Borough of Ellwood City is not in compliance with Section 2 CFR 200.303 of the Uniform Guidance which requires non-federal entities to maintain effective internal controls over federal awards. QUESTIONED COST: None CAUSE: It was not readily determinable as to why the Borough of Ellwood City had not formally adopted written policies and procedures surrounding the management of their federal award funds. RECOMMENDATION: I recommend that the Borough of Ellwood City adopt the required written policies and procedures surrounding the management of federal award funds as prescribed by Section 2 CFR 200.303 of the Uniform Guidance. The focus of these policies and procedures should be to ensure that the Borough officials who are responsible for carrying out the objectives of the federal financial award understand 1) the federal statutes, regulations, and terms and conditions of the award, 2) how to evaluate and properly monitor compliance, and 3) the steps to take if noncompliance is identified. VIEWS OF RESPONSIBLE OFFICIALS: The Borough of Ellwood City concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
2023-001 Suspension and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP0804; 2021 Pass-Through Agency: N/A - Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The County's procurement policy requires staff to verify contractors are not suspended, debarred, or otherwise excluded at SAM.gov. Condition: For two of the five covered transactions tested, the County did not verify for suspended or debarred vendors, in accordance with its policy, prior to entering into the covered transactions. Questioned Costs: None Context: Our sample of covered transactions included three payments to beneficiaries who signed certifications that they were not suspended or debarred in the grant agreements for receipt of their funds. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the federal award. Cause: The County has procedures in place to perform verification and retain documentation, but not all department heads are aware of the procedures or federal requirements. Recommendation: We recommend the County verify and maintain documentation to demonstrate that vendors are not debarred, suspended, or otherwise excluded from conducting business with the County; the County should complete this documentation prior to entering into a covered transaction. In addition, the County should provide training to department heads to ensure staff are aware of federal requirements and County procedures. View of Responsible Official: Concur
2023-002 Eligibility Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM; 2023 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. Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by Clay County to support the eligibility determination process. In the case files reviewed for eligibility, not all documentation to support participant eligibility was available or input into MAXIS. The following exceptions were noted in the sample of 40 case files tested: • Two case files had no application on file with the County, and one case file was missing the signature page of the application. • In four case files, the documented method used to verify citizenship in MAXIS was different than documented in the case file. • Four case files had an asset listed in MAXIS that did not match the documentation in the case file. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to program participants. Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Clay County performs the “intake function” needed for this program, while the state maintains the MAXIS system, which supports the eligibility determination process. Participants receive benefit payments from the state. The sample size was based on the guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The lack of updated information in MAXIS to document verification of key eligibility-determining factors increases the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel entering case data into MAXIS did not obtain and/or update the information in the system. Recommendation: We recommend Clay County implement additional procedures to provide reasonable assurance that all documentation is obtained and properly input or updated in MAXIS. View of Responsible Official: Concur
2023-001 OVERPAYMENTS TO SUBRECIPIENT Federal agency: U.S. Department of Department of Health and Human Services Federal Program Title & Assistance Listing Number: Substance Abuse and Mental Health Services Projects of Regional and National Significance -93.243 Award Period: 12/31/2022 - 12/30/2024 Type of Finding: Significant Deficiency Compliance Areas: Allowable Costs, Cash Management Questioned Costs: None Condition During our testing of subrecipient disbursements, we found that management does not require invoices from subrecipients before making disbursements. Instead, they allocate a predetermined monthly amount based on prorated subaward totals, making adjustments upon receipt of invoices and again at year-end. An error in a subrecipient's invoice led to an overpayment of $27,525 and remained uncorrected during the year. As a result, UVNR over recognized federal revenue by the same amount. An audit adjustment was made to correct both federal expenditures and revenues in 2023. Criteria An improper payment, as defined in 2 CFR §200.1, is any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Specific to the Organization, federal reimbursement requests are completed monthly. Effect Overstatement of federal revenues and expenditures, respectively. The overpayment would also necessitate certain adjustments to the award amounts given to the subrecipient in the following year. Cause Management admittedly overlooked the error in the subrecipient’s submitted invoice during review.
2023-001 Procurement, Suspension, and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) (Journey to Independence) Award Number and Year: 5H79SM082970-03; 2023 and 5H79SM082970-04; 2024 Pass-Through Agency: Direct Award Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. PACT’s procurement policy requires that the contractor submit a certification that they are not suspended and debarred and also requires PACT staff to verify the vendor is not suspended, debarred, or otherwise excluded at SAM.gov. Condition: For the one contractor not considered a sole source vendor, PACT obtained three quotes or proposals but did not have documentation supporting the selection of this vendor. In addition, PACT did not collect a certification that the contractor is not suspended or debarred or document its verification that this contractor was not suspended, debarred, or otherwise excluded at SAM.gov before entering into the covered transaction. Questioned Costs: None Context: The majority of costs associated with this federal grant are payroll related with only five vendors providing goods or services that exceeded the micro-purchase threshold ($10,000). Other expenditures incurred are typically not related to contracts. PACT’s policy for non-payroll disbursements requires an approved Expenditure Authorization Form (EAF) as support documenting the reason for the purchase. PACT’s policy does not require documentation supporting the reason for the vendor selection. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing and Single Audits. Effect: It cannot be determined that the contracting process was open and fair because PACT did not document the rationale for the contractor selection. It also cannot be determined that an entity was not suspended, debarred, or otherwise excluded because PACT did not document that it performed a search on SAM.gov and did not collect a certification. Cause: PACT was not aware of the requirement to document the reasoning behind its contractor selections and believed obtaining quotes was sufficient. In addition, PACT believed that performing the search was sufficient and that documentation of the search or collection of a certification was not necessary. Revised procedures were in the process of being implemented during 2023. Recommendation: We recommend PACT develop formal procedures to document why a vendor is selected when price is not the sole factor (i.e., checklist or other criteria developed ahead of time). We recommend that PACT keep printouts (with dates) from SAM.gov to support that contractors were not suspended, debarred, or otherwise excluded prior to entering into covered transactions and collect certifications as required by policy. View of Responsible Official: Acknowledge
FINDING 2023-002 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): FY2021 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 2022-004. Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. INDIANA STATE BOARD OF ACCOUNTS 16 WAYNE 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 Coronavirus State and Local Fiscal Recovery Funds (SLFRF). Therefore, quarterly P&E reports were due by January 31, 2022, and the last day of the month after the end of each quarter thereafter. The County filed the applicable quarterly P&E reports as required; however, the ARP Grant Manager prepared and submitted the reports without an oversight or review process in place to prevent, or detect and correct, errors. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed by management of the County, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. There was no indication of an internal control process over reporting in place per inquiry with the officials and review of the reports. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure that appropriate reviews, approvals, and oversight are taking place so that the County continues to provide the Treasury with complete and accurate information in the P&E report. INDIANA STATE BOARD OF ACCOUNTS 17 WAYNE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Identification of the Federal Program: Grantor: U.S Department of Defense, U.S. Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing No. / FAIN / Pass-Through Entity (if applicable) / Pass-Through Entity Identifying Number (if applicable): 12.420 / W81XWH2110945 / Royal Institution for the Advancement of Learning / McGill University / PT89891 93.847 / RC2DK125960 93.847 / UC2DK126021 / MDI Biological Laboratory / UC2DK126021-04/ROGOSIN 93.847 / U01DK123786 / University of Washington / UWSC11731 Criteria or Specific Requirement: In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: Management was unable to provide evidence of a control being consistently performed throughout the audit period to address the risk that the Institute may enter into a covered transaction with an entity that is suspended, debarred, or otherwise excluded. Cause: Management has established a monthly suspension and debarment screening process for activities associated with the Institute’s Research and Development Cluster. However, the process was not designed effectively to ensure that all entities with which the Institute may enter into a covered transaction are included in the monthly screening process. Effect or Potential Effect: The lack of an effective control over suspension and debarment has the potential to result in noncompliance with the requirement. Questioned Costs: None. Context: The Institute assesses vendors upon initial entry into the Institute’s procurement system and performs a monthly screening of the vendors to determine if they are either suspended, debarred or otherwise excluded. The Institute utilizes a third-party service provider to perform the monthly screening of its vendors by providing a file of all vendors from the Institute’s procurement system. For the two months subject to our testing, upon receipt of the output report of screened vendors from the service provider, the Institute did not validate that its full list of vendors sent to the service provider was appropriately screened. For the two months tested, we noted that there were discrepancies between the Institute’s vendor list and the number of vendors screened. Additionally, from a sample of five vendors with activity associated with the Institute’s Research and Development Cluster drawn from our transactional tests of compliance, we noted that evidence of the monthly screening could not be provided for one vendor. In our further testing of compliance, we independently noted no suspended or debarred vendors. Identification as a repeat finding: This finding was reported as finding 2022-002 in the prior year. Recommendation: Management should further enhance the design of its control to ensure that all vendors and subrecipients associated with the Institute’s Research and Development Cluster are subject to the monthly suspension and debarment screening process by performing a monthly reconciliation of the vendor list submitted to the third-party service provider and the screening results output report provided by the service provider. Views of Responsible Officials: Management concurs with this audit finding and will continue to enhance the suspension and debarment review process and controls to meet the requirements of 2 CFR part 200.
Identification of the Federal Program: Grantor: U.S Department of Defense, U.S. Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing No. / FAIN / Pass-Through Entity (if applicable) / Pass-Through Entity Identifying Number (if applicable): 12.420 / W81XWH2110945 / Royal Institution for the Advancement of Learning / McGill University / PT89891 93.847 / RC2DK125960 93.847 / UC2DK126021 / MDI Biological Laboratory / UC2DK126021-04/ROGOSIN 93.847 / U01DK123786 / University of Washington / UWSC11731 Criteria or Specific Requirement: In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: Management was unable to provide evidence of a control being consistently performed throughout the audit period to address the risk that the Institute may enter into a covered transaction with an entity that is suspended, debarred, or otherwise excluded. Cause: Management has established a monthly suspension and debarment screening process for activities associated with the Institute’s Research and Development Cluster. However, the process was not designed effectively to ensure that all entities with which the Institute may enter into a covered transaction are included in the monthly screening process. Effect or Potential Effect: The lack of an effective control over suspension and debarment has the potential to result in noncompliance with the requirement. Questioned Costs: None. Context: The Institute assesses vendors upon initial entry into the Institute’s procurement system and performs a monthly screening of the vendors to determine if they are either suspended, debarred or otherwise excluded. The Institute utilizes a third-party service provider to perform the monthly screening of its vendors by providing a file of all vendors from the Institute’s procurement system. For the two months subject to our testing, upon receipt of the output report of screened vendors from the service provider, the Institute did not validate that its full list of vendors sent to the service provider was appropriately screened. For the two months tested, we noted that there were discrepancies between the Institute’s vendor list and the number of vendors screened. Additionally, from a sample of five vendors with activity associated with the Institute’s Research and Development Cluster drawn from our transactional tests of compliance, we noted that evidence of the monthly screening could not be provided for one vendor. In our further testing of compliance, we independently noted no suspended or debarred vendors. Identification as a repeat finding: This finding was reported as finding 2022-002 in the prior year. Recommendation: Management should further enhance the design of its control to ensure that all vendors and subrecipients associated with the Institute’s Research and Development Cluster are subject to the monthly suspension and debarment screening process by performing a monthly reconciliation of the vendor list submitted to the third-party service provider and the screening results output report provided by the service provider. Views of Responsible Officials: Management concurs with this audit finding and will continue to enhance the suspension and debarment review process and controls to meet the requirements of 2 CFR part 200.
Identification of the Federal Program: Grantor: U.S Department of Defense, U.S. Department of Health and Human Services Program Name: Research and Development Cluster Assistance Listing No. / FAIN / Pass-Through Entity (if applicable) / Pass-Through Entity Identifying Number (if applicable): 12.420 / W81XWH2110945 / Royal Institution for the Advancement of Learning / McGill University / PT89891 93.847 / RC2DK125960 93.847 / UC2DK126021 / MDI Biological Laboratory / UC2DK126021-04/ROGOSIN 93.847 / U01DK123786 / University of Washington / UWSC11731 Criteria or Specific Requirement: In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: Management was unable to provide evidence of a control being consistently performed throughout the audit period to address the risk that the Institute may enter into a covered transaction with an entity that is suspended, debarred, or otherwise excluded. Cause: Management has established a monthly suspension and debarment screening process for activities associated with the Institute’s Research and Development Cluster. However, the process was not designed effectively to ensure that all entities with which the Institute may enter into a covered transaction are included in the monthly screening process. Effect or Potential Effect: The lack of an effective control over suspension and debarment has the potential to result in noncompliance with the requirement. Questioned Costs: None. Context: The Institute assesses vendors upon initial entry into the Institute’s procurement system and performs a monthly screening of the vendors to determine if they are either suspended, debarred or otherwise excluded. The Institute utilizes a third-party service provider to perform the monthly screening of its vendors by providing a file of all vendors from the Institute’s procurement system. For the two months subject to our testing, upon receipt of the output report of screened vendors from the service provider, the Institute did not validate that its full list of vendors sent to the service provider was appropriately screened. For the two months tested, we noted that there were discrepancies between the Institute’s vendor list and the number of vendors screened. Additionally, from a sample of five vendors with activity associated with the Institute’s Research and Development Cluster drawn from our transactional tests of compliance, we noted that evidence of the monthly screening could not be provided for one vendor. In our further testing of compliance, we independently noted no suspended or debarred vendors. Identification as a repeat finding: This finding was reported as finding 2022-002 in the prior year. Recommendation: Management should further enhance the design of its control to ensure that all vendors and subrecipients associated with the Institute’s Research and Development Cluster are subject to the monthly suspension and debarment screening process by performing a monthly reconciliation of the vendor list submitted to the third-party service provider and the screening results output report provided by the service provider. Views of Responsible Officials: Management concurs with this audit finding and will continue to enhance the suspension and debarment review process and controls to meet the requirements of 2 CFR part 200.