Medical Assistance Eligibility Condition: The Minnesota Department of Human Services (DHS) maintains the computer systems, MAXIS and METS, which are used by Renville County to support the eligibility determination process. In the case files reviewed for eligibility, there were several cases noted in which the Adjusted Gross Income (AGI) was not calculated correctly, and there was no supporting documentation provided for the differences. Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states 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. Cause: Program personnel entering case data into MAXIS or clearing case data flagged by METS did not properly calculate or retain support for the AGI entered into the system. Effect: As a result, the Board is out compliance with the statute. Recommendation: We recommend Renville County define and implement procedures for calculating and supporting AGI used for eligibility determinations. Management Response: The County acknowledges the finding and has implemented procedures to ensure AGI is calculated correctly.
2023-002 Internal Controls over Period of Performance and Procurement, Suspension and Debarment (Material Weakness) U.S. Department of Housing and Urban Development 14.267 Continuum of Care Program 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.403 (g) and (h), the Organization’s expenditures must be adequately documented and incurred during the approved budget period, respectively. Furthermore, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: AIH’s control process relied on the review of Director of Housing and Supportive Services for maintaining compliance with the period of performance and procurement, suspension and debarment requirements under the Compliance Supplement. However, that control appears to not have worked as intended during the year because of identified fraud relating to questionable procurements for certain services obtained throughout the year that were subject to approval and review by the Director of Housing and Supporting Services. Note that the fraud was identified by management and has already been reported to the grantor. In addition, an accrual for the fraudulent reimbursements was recorded at year end. Cause: The Director of Housing and Supportive Services did not adequately review credit card and check transactions to ensure transactions were for legitimate business purposes and within the period of performance. Effect: Allowable cost was not required to be tested under the compliance supplement. However, AIH has already identified and accrued for remittances to be made to the grantor for fraudulent reimbursements. For testing of period of performance and procurement, suspension and debarment compliance requirements, sample sizes had to be increased to gain comfort over the requirements to be tested. No compliance issues were identified during our testing. Questioned Costs: $33,439 Perspective: Identified fraud by management was specific to one former program coordinator and one former case manager. Repeat Finding: No Recommendation: Director of Housing and Supportive Services and any other approvers should be retrained to identify allowable and reasonable costs under the grant before approving such requests. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-002 Internal Controls over Period of Performance and Procurement, Suspension and Debarment (Material Weakness) U.S. Department of Housing and Urban Development 14.267 Continuum of Care Program 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.403 (g) and (h), the Organization’s expenditures must be adequately documented and incurred during the approved budget period, respectively. Furthermore, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: AIH’s control process relied on the review of Director of Housing and Supportive Services for maintaining compliance with the period of performance and procurement, suspension and debarment requirements under the Compliance Supplement. However, that control appears to not have worked as intended during the year because of identified fraud relating to questionable procurements for certain services obtained throughout the year that were subject to approval and review by the Director of Housing and Supporting Services. Note that the fraud was identified by management and has already been reported to the grantor. In addition, an accrual for the fraudulent reimbursements was recorded at year end. Cause: The Director of Housing and Supportive Services did not adequately review credit card and check transactions to ensure transactions were for legitimate business purposes and within the period of performance. Effect: Allowable cost was not required to be tested under the compliance supplement. However, AIH has already identified and accrued for remittances to be made to the grantor for fraudulent reimbursements. For testing of period of performance and procurement, suspension and debarment compliance requirements, sample sizes had to be increased to gain comfort over the requirements to be tested. No compliance issues were identified during our testing. Questioned Costs: $33,439 Perspective: Identified fraud by management was specific to one former program coordinator and one former case manager. Repeat Finding: No Recommendation: Director of Housing and Supportive Services and any other approvers should be retrained to identify allowable and reasonable costs under the grant before approving such requests. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-002 Internal Controls over Period of Performance and Procurement, Suspension and Debarment (Material Weakness) U.S. Department of Housing and Urban Development 14.267 Continuum of Care Program 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.403 (g) and (h), the Organization’s expenditures must be adequately documented and incurred during the approved budget period, respectively. Furthermore, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: AIH’s control process relied on the review of Director of Housing and Supportive Services for maintaining compliance with the period of performance and procurement, suspension and debarment requirements under the Compliance Supplement. However, that control appears to not have worked as intended during the year because of identified fraud relating to questionable procurements for certain services obtained throughout the year that were subject to approval and review by the Director of Housing and Supporting Services. Note that the fraud was identified by management and has already been reported to the grantor. In addition, an accrual for the fraudulent reimbursements was recorded at year end. Cause: The Director of Housing and Supportive Services did not adequately review credit card and check transactions to ensure transactions were for legitimate business purposes and within the period of performance. Effect: Allowable cost was not required to be tested under the compliance supplement. However, AIH has already identified and accrued for remittances to be made to the grantor for fraudulent reimbursements. For testing of period of performance and procurement, suspension and debarment compliance requirements, sample sizes had to be increased to gain comfort over the requirements to be tested. No compliance issues were identified during our testing. Questioned Costs: $33,439 Perspective: Identified fraud by management was specific to one former program coordinator and one former case manager. Repeat Finding: No Recommendation: Director of Housing and Supportive Services and any other approvers should be retrained to identify allowable and reasonable costs under the grant before approving such requests. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-002 Internal Controls over Period of Performance and Procurement, Suspension and Debarment (Material Weakness) U.S. Department of Housing and Urban Development 14.267 Continuum of Care Program 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.403 (g) and (h), the Organization’s expenditures must be adequately documented and incurred during the approved budget period, respectively. Furthermore, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: AIH’s control process relied on the review of Director of Housing and Supportive Services for maintaining compliance with the period of performance and procurement, suspension and debarment requirements under the Compliance Supplement. However, that control appears to not have worked as intended during the year because of identified fraud relating to questionable procurements for certain services obtained throughout the year that were subject to approval and review by the Director of Housing and Supporting Services. Note that the fraud was identified by management and has already been reported to the grantor. In addition, an accrual for the fraudulent reimbursements was recorded at year end. Cause: The Director of Housing and Supportive Services did not adequately review credit card and check transactions to ensure transactions were for legitimate business purposes and within the period of performance. Effect: Allowable cost was not required to be tested under the compliance supplement. However, AIH has already identified and accrued for remittances to be made to the grantor for fraudulent reimbursements. For testing of period of performance and procurement, suspension and debarment compliance requirements, sample sizes had to be increased to gain comfort over the requirements to be tested. No compliance issues were identified during our testing. Questioned Costs: $33,439 Perspective: Identified fraud by management was specific to one former program coordinator and one former case manager. Repeat Finding: No Recommendation: Director of Housing and Supportive Services and any other approvers should be retrained to identify allowable and reasonable costs under the grant before approving such requests. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-002 Internal Controls over Period of Performance and Procurement, Suspension and Debarment (Material Weakness) U.S. Department of Housing and Urban Development 14.267 Continuum of Care Program 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.403 (g) and (h), the Organization’s expenditures must be adequately documented and incurred during the approved budget period, respectively. Furthermore, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: AIH’s control process relied on the review of Director of Housing and Supportive Services for maintaining compliance with the period of performance and procurement, suspension and debarment requirements under the Compliance Supplement. However, that control appears to not have worked as intended during the year because of identified fraud relating to questionable procurements for certain services obtained throughout the year that were subject to approval and review by the Director of Housing and Supporting Services. Note that the fraud was identified by management and has already been reported to the grantor. In addition, an accrual for the fraudulent reimbursements was recorded at year end. Cause: The Director of Housing and Supportive Services did not adequately review credit card and check transactions to ensure transactions were for legitimate business purposes and within the period of performance. Effect: Allowable cost was not required to be tested under the compliance supplement. However, AIH has already identified and accrued for remittances to be made to the grantor for fraudulent reimbursements. For testing of period of performance and procurement, suspension and debarment compliance requirements, sample sizes had to be increased to gain comfort over the requirements to be tested. No compliance issues were identified during our testing. Questioned Costs: $33,439 Perspective: Identified fraud by management was specific to one former program coordinator and one former case manager. Repeat Finding: No Recommendation: Director of Housing and Supportive Services and any other approvers should be retrained to identify allowable and reasonable costs under the grant before approving such requests. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-002 Internal Controls over Period of Performance and Procurement, Suspension and Debarment (Material Weakness) U.S. Department of Housing and Urban Development 14.267 Continuum of Care Program 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.403 (g) and (h), the Organization’s expenditures must be adequately documented and incurred during the approved budget period, respectively. Furthermore, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: AIH’s control process relied on the review of Director of Housing and Supportive Services for maintaining compliance with the period of performance and procurement, suspension and debarment requirements under the Compliance Supplement. However, that control appears to not have worked as intended during the year because of identified fraud relating to questionable procurements for certain services obtained throughout the year that were subject to approval and review by the Director of Housing and Supporting Services. Note that the fraud was identified by management and has already been reported to the grantor. In addition, an accrual for the fraudulent reimbursements was recorded at year end. Cause: The Director of Housing and Supportive Services did not adequately review credit card and check transactions to ensure transactions were for legitimate business purposes and within the period of performance. Effect: Allowable cost was not required to be tested under the compliance supplement. However, AIH has already identified and accrued for remittances to be made to the grantor for fraudulent reimbursements. For testing of period of performance and procurement, suspension and debarment compliance requirements, sample sizes had to be increased to gain comfort over the requirements to be tested. No compliance issues were identified during our testing. Questioned Costs: $33,439 Perspective: Identified fraud by management was specific to one former program coordinator and one former case manager. Repeat Finding: No Recommendation: Director of Housing and Supportive Services and any other approvers should be retrained to identify allowable and reasonable costs under the grant before approving such requests. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-003 Internal Controls and Compliance over Allowable Costs (Significant Deficiency) U.S. Department of Health and Human Services 93.939 HIV Prevention Activities - Non-Governmental Organization Based 2022-2023 and 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) Cause: The personnel costs charged to the grant were not reconciled to timesheets correctly by the accounting personnel. Effect: AIH requested in error reimbursement for unallowable payroll costs. Questioned Costs: $42 Perspective: Allocation errors were noted for 2 employees in 3 payroll periods tested. Repeat Finding: No Auditor’s Recommendation: Review process should be reevaluated and employees retrained to ensure that only actual hours worked from timesheets are charged to grant. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-003 Internal Controls and Compliance over Allowable Costs (Significant Deficiency) U.S. Department of Health and Human Services 93.939 HIV Prevention Activities - Non-Governmental Organization Based 2022-2023 and 2023-2024 Funding Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) Cause: The personnel costs charged to the grant were not reconciled to timesheets correctly by the accounting personnel. Effect: AIH requested in error reimbursement for unallowable payroll costs. Questioned Costs: $42 Perspective: Allocation errors were noted for 2 employees in 3 payroll periods tested. Repeat Finding: No Auditor’s Recommendation: Review process should be reevaluated and employees retrained to ensure that only actual hours worked from timesheets are charged to grant. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
Material Weakness in Cash Management Controls Federal Agency and Pass-through Entity: U.S. Environmental Protection Agency – Georgia Environmental Finance Authority Program Title/Cluster: Clean Water State Revolving Fund Cluster (CWSRF) Criteria: In accordance with 2 CFR §200.305(b), when advance payments are made, the non-federal entity must maintain written procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury (or pass-through entity) and disbursement. Effective internal control over compliance with the cash management requirement includes documented procedures to ensure federal funds are drawn down only when needed and promptly disbursed. Per 2 CFR §200.303, the non-federal entity must establish and maintain effective internal controls over federal awards that provide 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: During our testing of compliance with cash management requirements for the CWSRF program, we inquired about the City’s procedures to minimize the time elapsed between draw requests, deposit of funds, and disbursement to contractors. We noted that the City did not have formal or documented internal controls in place specifically related to this process. No control activities were identified to monitor or ensure timely disbursement following drawdowns. Effect: The absence of identifiable internal controls over cash management increases the risk of noncompliance with federal requirements, including the potential for drawing federal funds in advance of immediate cash needs. While our audit testing did not identify any instances of noncompliance (contractor payments were made within a reasonable timeframe) this control deficiency represents a material weakness in internal control over compliance. Questioned Costs: None reported. Recommendation: We recommend that the City develop and implement formal, documented procedures and internal controls to ensure that federal funds are drawn only when needed and disbursed in a timely manner in accordance with federal cash management requirements. This should include documented monitoring of the timing of drawdowns and corresponding disbursements. Status: New finding in the current year.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Cluster Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 228MN300S6031 – 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Number: H55210010 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Agencies are required to automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP (7 CFR sections 272.10 and 277.18). This includes: (1) processing and storing all case file information necessary for eligibility determination and benefit calculation, identifying specific elements that affect eligibility, and notifying the certification unit of cases requiring notices of case disposition, adverse action and mass change, and expiration; (2) providing an automatic cutoff of participation for households that have not been recertified at the end of their certification period by reapplying and being determined eligible for a new period (7 CFR sections 272.10(b)(1)(iii) and 273.10(f) and (g)); and (3) generating data necessary to meet federal issuance and reconciliation reporting requirements. 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 (DHS) maintains the computer system, MAXIS, which is used by the County to support the eligibility determination process. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. While periodic supervisory case reviews are performed to monitor compliance with grant requirements for eligibility, when performing our case file review for eligibility, we noted: • There was no documentation or improper documentation related to the verification of citizenship for 6 of the 60 casefiles tested. • There was no verification of income on 3 of the 60 casefiles tested. • Income was input into Maxis incorrectly on 2 of the 60 casefiles tested. • There was not signature on application on 1 of the 60 casefiles tested. Questioned costs: None Context: 11 of the 60 casefiles tested had the above noted issues. Cause: The County has had significant turnover and new staff over the past three years as well as increases in caseloads. There was also changing guidance as waivers from the pandemic expired. All of this provided more opportunities for errors to occur. Effect: Improper input or updating of information in MAXIS and lack of verification or follow-up of eligibility determining factors increase the risk that a program participant will receive benefits when they are not eligible. Repeat finding: Yes – 2022-004 Recommendation: We recommend the County implement process and procedures to provide reasonable assurance that all necessary documentation to support eligibility determination exists and is properly input or updated in MAXIS and issues are followed up in a timely manner. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Cluster Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 228MN300S6031 – 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: The County must follow Uniform Guidance Subsection 200.320 Methods of Procurement for all applicable procurements over the County’s micro-purchase threshold. For purchases over the County's micro-purchase threshold of $10,000 but not exceeding the simplified acquisition threshold of $250,000, the County should follow small purchase procedures. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the County. Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing, it was noted that for 2 contracts out of 4 tested the County was unable to provide documentation showing they contract awards followed the open competition requirement. Questioned costs: None Context: 2 out of the 4 contracts tested had no documentation of open competition. Cause: The county purchasing likely followed county purchase policies for non-federal expenditures. Effect: It would be possible that the County could end up spending more federal dollars than necessary for a product or service, if they are not going through the steps to ensure they are utilizing the best vendor for the county and documenting this process each year. Repeat finding: No Recommendation: We recommend the County follow their federal purchasing policy in all of their federal programs and retain documentation of that process occurring. As necessary, the County may need to add internal controls that are program specific to ensure this properly occurs. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: 2 of 40 disbursements selected for testing lacked formal documentation of review and approval. Questioned costs: None Context: Lack of formal documentation of review and approval was noted with 2 of 40 disbursements selected for testing. Cause: At the time of testing, due to the cost allocation plan using a 2-year lag and then the audit occurring after year end, the item selected for testing was from about 3 years ago, and the County did not retain the supporting documentation of review and approval. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: Yes – 2022-0007 Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Questioned costs: None Context: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Cause: The County did not adequately review the Cost Allocation Plan which was prepared by a third party vendor. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: No Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP3412 - 2023 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Related to subrecipient monitoring requirements of State and Local Fiscal Recovery Funds, there should be a documented control in place to ensure all subrecipients of federal grants are in compliance with Title 2 U.S. Code of Federal Regulations § 200.331 - 200.333. 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: During our testing it was noted that, for 1 of 1 subrecipients tested, the county was not able to provide any documentation of the review performed to ensure they are meeting federal requirements surrounding subrecipient monitoring. Questioned costs: None Context: 1 of 1 subrecipients selected for testing were missing documentation. Cause: The County has a monitoring checklist they complete, but did not have adequate documentation that it was completed. Effect: It is possible that the County subrecipient could be ineligible to receive funding if an error is made in compiling the information since there is no control in place in some instances to ensure that errors are not being made prior to payment. Repeat finding: No Recommendation: We recommend that the County establish clear policies and procedures for formal review and approval of subrecipient monitoring checklists. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2201MNTANF – 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Number: H55214077 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The State provides the specifics on the definition of need, which the State and County uses in determining eligibility. Casefiles and related computer systems must be accurately maintained to support eligibility determinations. Condition: The Minnesota Department of Human Services (DHS) maintains the computer system, MAXIS, which is used by the County to support the eligibility determination process. While periodic supervisory case reviews are performed to monitor compliance with grant requirements for eligibility, when performing our case file review for eligibility, we noted that not all documentation was available to support participant eligibility. In other circumstances, information was either input incorrectly or not properly updated in MAXIS. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. The following instances were noted in sample of 60 cases tested: • 9 of 60 casefiles selected for testing had citizenship selected as yes, but had no support retained to prove that citizenship verification had occurred. • 3 of 60 casefiles selected for testing had citizenship verified by driver’s license which is not a valid method of determining citizenship. • 8 of 60 casefiles selected for testing did not have verified worker approval of annual eligibility certification documentation on file. • 12 of 60 casefiles selected for testing had various inconsistencies between what was shown on MAXIS for income or assets and what was provided as testing support in the casefile to State’s eligibility requirements for TANF as provided in the State plan, including being "needy." Questioned costs: None Context: The context of the variance instances noted in the 60 case files tested is summarized above. Note that, of the 60 case files tested, there were a total of 32 instances that were part of 30 casefiles. Cause: The County has had significant turnover and new staff over the past three years as well as increases in caseloads. There was also changing guidance as waivers from the pandemic expired. All of this provided more opportunities for errors to occur. Effect: Improper input or updating of information in MAXIS and lack of verification or follow-up of eligibility determining factors increase the risk that a program participant will receive benefits when they are not eligible. Repeat finding: Yes – 2022-003 Recommendation: We recommend the County implement process and procedures to provide reasonable assurance that all necessary documentation to support eligibility determination exists and is properly input or updated in MAXIS and issues are followed up in a timely manner. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2201MNTANF – 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Number: H55214077 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The State provides the specifics on the definition of need, which the State and County uses in determining eligibility. Casefiles and related computer systems must be accurately maintained to support eligibility determinations. Condition: The Minnesota Department of Human Services (DHS) maintains the computer system, MAXIS, which is used by the County to support the eligibility determination process. While periodic supervisory case reviews are performed to monitor compliance with grant requirements for eligibility, when performing our case file review for eligibility, we noted that not all documentation was available to support participant eligibility. In other circumstances, information was either input incorrectly or not properly updated in MAXIS. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. The following instances were noted in sample of 60 cases tested: • 9 of 60 casefiles selected for testing had citizenship selected as yes, but had no support retained to prove that citizenship verification had occurred. • 3 of 60 casefiles selected for testing had citizenship verified by driver’s license which is not a valid method of determining citizenship. • 8 of 60 casefiles selected for testing did not have verified worker approval of annual eligibility certification documentation on file. • 12 of 60 casefiles selected for testing had various inconsistencies between what was shown on MAXIS for income or assets and what was provided as testing support in the casefile to State’s eligibility requirements for TANF as provided in the State plan, including being "needy." Questioned costs: None Context: The context of the variance instances noted in the 60 case files tested is summarized above. Note that, of the 60 case files tested, there were a total of 32 instances that were part of 30 casefiles. Cause: The County has had significant turnover and new staff over the past three years as well as increases in caseloads. There was also changing guidance as waivers from the pandemic expired. All of this provided more opportunities for errors to occur. Effect: Improper input or updating of information in MAXIS and lack of verification or follow-up of eligibility determining factors increase the risk that a program participant will receive benefits when they are not eligible. Repeat finding: Yes – 2022-003 Recommendation: We recommend the County implement process and procedures to provide reasonable assurance that all necessary documentation to support eligibility determination exists and is properly input or updated in MAXIS and issues are followed up in a timely manner. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: 2 of 40 disbursements selected for testing lacked formal documentation of review and approval. Questioned costs: None Context: Lack of formal documentation of review and approval was noted with 2 of 40 disbursements selected for testing. Cause: At the time of testing, due to the cost allocation plan using a 2-year lag and then the audit occurring after year end, the item selected for testing was from about 3 years ago, and the County did not retain the supporting documentation of review and approval. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: Yes – 2022-0007 Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: 2 of 40 disbursements selected for testing lacked formal documentation of review and approval. Questioned costs: None Context: Lack of formal documentation of review and approval was noted with 2 of 40 disbursements selected for testing. Cause: At the time of testing, due to the cost allocation plan using a 2-year lag and then the audit occurring after year end, the item selected for testing was from about 3 years ago, and the County did not retain the supporting documentation of review and approval. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: Yes – 2022-0007 Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Questioned costs: None Context: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Cause: The County did not adequately review the Cost Allocation Plan which was prepared by a third party vendor. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: No Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Questioned costs: None Context: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Cause: The County did not adequately review the Cost Allocation Plan which was prepared by a third party vendor. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: No Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Numbers: 93.778 Federal Award Identification Numbers and Years: 2305MNMAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55215048 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: The Minnesota Department of Human Services (DHS) requires a listing of employees working on social services programs to be submitted quarterly, known as a random moment study listing (RMS listing). DHS then determines the amount applicable to the applicable income maintenance programs through random moment studies. Each quarter the County’s coordinator reviews their RMS listing to ensure the employees listed are accurate for the people working and being coded in the general ledger. Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: 7 individuals were included on the 1st quarter Social Services RMS listing sent to the State that were not supposed to be included in the listings, 7 individuals were noted to have the same issue on the 4th quarter Social Services RMS listing. Questioned costs: None Context: In our testing of 2 of the 4 quarterly RMS listings, 7 individuals were included on the 1st quarter RMS listing sent to the State that were not supposed to be included in the listings, 7 individuals were noted to have the same issue on the 4th quarter RMS listing. There were 302 County staff listed in the 1st quarter’s RMS listing and 306 County staff listed in the 4th quarter’s RMS listing. Cause: The County's RMS controls and procedures were not robust enough to note that the RMS listings should have excluded various individuals. Increased turnover and growth of the programs also created an increase in the number changes that were needed to be made to the listings. Effect: Lack of proper controls could affect allocation of fundings due to the staff not being in MAXIS or actually assigned to social services case files to properly respond to the random moment requests that are sent by the State as part of the random moment study. Repeat Finding: No Recommendation: We recommend that the County review its procedures and control to ensure all RMS listings sent to the State properly exclude those necessary individuals no longer working in the programs. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Numbers: 93.778 Federal Award Identification Numbers and Years: 2305MN5MAP – 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55215048 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Agencies are required to automate their MA operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning MA (7 CFR sections 272.10 and 277.18). This includes: (1) processing and storing all case file information necessary for eligibility determination and benefit calculation, identifying specific elements that affect eligibility, and notifying the certification unit of cases requiring notices of case disposition, adverse action and mass change, and expiration; (2) providing an automatic cutoff of participation for households that have not been recertified at the end of their certification period by reapplying and being determined eligible for a new period (7 CFR sections 272.10(b)(1)(iii) and 273.10(f) and (g)); and (3) generating data necessary to meet federal issuance and reconciliation reporting requirements. Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: One of the casefiles was approved utilizing an unsigned application for July where it was noted that the application was signed. There was a signed application in September for this individual, however the MAXIS system showed that the application was signed and dated in July. The second issue noted was for eligibility for adoption assistance that didn’t have any casefile documentation that it was reviewed during the year for eligibility. Cause: The County has had significant turnover and new staff over the past three years as well as increases in caseloads. There was also changing guidance as waivers from the pandemic expired. All of this provided more opportunities for errors to occur. Questioned costs: None Context: The Minnesota Department of Human Services (DHS) maintains the computer system, MAXIS, which is used by the County to support the eligibility determination process. While periodic supervisory case reviews are performed to monitor compliance with grant requirements for eligibility, when performing our case file review for eligibility, we noted issues related to 2 of the 40 Maxis Individuals Tested. Cause: The County has had significant turnover and new staff over the past three years as well as increases in caseloads. There was also changing guidance as waivers from the pandemic expired. All of this provided more opportunities for errors to occur. Effect: Improper input or updating of information in MAXIS and lack of verification or follow-up of eligibility determining factors increase the risk that a program participant will receive benefits when they are not eligible. Repeat finding: No Recommendation: We recommend the County implement process and procedures to provide reasonable assurance that all necessary documentation to support eligibility determination exists and is properly input or updated in MAXIS and issues are followed up in a timely manner. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: 2 of 40 disbursements selected for testing lacked formal documentation of review and approval. Questioned costs: None Context: Lack of formal documentation of review and approval was noted with 2 of 40 disbursements selected for testing. Cause: At the time of testing, due to the cost allocation plan using a 2-year lag and then the audit occurring after year end, the item selected for testing was from about 3 years ago, and the County did not retain the supporting documentation of review and approval. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: Yes – 2022-0007 Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Numbers: 93.778 Federal Award Identification Numbers and Years: 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55215048 Award Period: 2023 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The County and the Minnesota Department of Human Services (DHS) have a contract surrounding the federal funds. This contract has several obligations and reporting requirements the County must follow. Condition: • The County was unable to provide documented formal review or approval of the LCTS Annual Spending Report. • The County was unable to provide documented formal review or approval of the quarterly cost reports. • The County was unable to provide a documented formal review process to ensure that LCTS fiscal site contacts were trained on completing cost schedules. Questioned costs: None Context: The County did not provide the documentation of the review over these requirements. Cause: The County did not maintain a record of their review process Effect: There is no way to verify the review process was completed and completed timely. Repeat finding: No Recommendation: We recommend that the County review its policies and controls to ensure there is a formally documented control to ensure all reports are reviewed and the documentation of the review is retained. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture & U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program Cluster, Temporary Assistance for Needy Families, & Medical Assistance Assistance Listing Numbers: 10.561, 93.558, and 93.778 Federal Award Identification Numbers and Years: 228MN300S6031 – 2023, 2201MNTANF – 2023, 2305MN5MAP - 2023 Passed Through Entity: Minnesota Department of Human Services Pass Through Numbers: H55230010, H55214077, H55215048 Award Period: 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Costs included in the County’s Cost Allocation Plan should follow the principles to establish allowability or unallowability of certain items of cost (2 CFR sections 200.420 through 200.476), including retention of supporting documentation and documentation of the related controls. 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: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Questioned costs: None Context: Building depreciation on the Cost Allocation Plan was overstated and did not agree to the actual building depreciation. Cause: The County did not adequately review the Cost Allocation Plan which was prepared by a third party vendor. Effect: Lack of proper controls result in error or unintended expenditures that could go undetected or not detected and corrected in a timely manner. Repeat Finding: No Recommendation: We recommend that the County retain documentation of review and approval of all expenditures. Views of responsible officials: There is no disagreement with the audit finding.
Item 2023-007: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568, and 10.569 Federal award grant number: 204645, 203684, 236829, and 229353 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 14 reimbursement requests. The sample size of three was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted three instances in our sample size of three where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: Yes Recommendation: We recommend that SHNLFB implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHNLFB concurs with this finding and a response is included in the corrective action plan.
Item 2023-007: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568, and 10.569 Federal award grant number: 204645, 203684, 236829, and 229353 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 14 reimbursement requests. The sample size of three was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted three instances in our sample size of three where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: Yes Recommendation: We recommend that SHNLFB implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHNLFB concurs with this finding and a response is included in the corrective action plan.
Item 2023-007: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568, and 10.569 Federal award grant number: 204645, 203684, 236829, and 229353 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 14 reimbursement requests. The sample size of three was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted three instances in our sample size of three where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: Yes Recommendation: We recommend that SHNLFB implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHNLFB concurs with this finding and a response is included in the corrective action plan.
Item 2023-007: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568, and 10.569 Federal award grant number: 204645, 203684, 236829, and 229353 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 14 reimbursement requests. The sample size of three was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted three instances in our sample size of three where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: Yes Recommendation: We recommend that SHNLFB implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHNLFB concurs with this finding and a response is included in the corrective action plan.
Item 2023-007: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568, and 10.569 Federal award grant number: 204645, 203684, 236829, and 229353 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 14 reimbursement requests. The sample size of three was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted three instances in our sample size of three where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: Yes Recommendation: We recommend that SHNLFB implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHNLFB concurs with this finding and a response is included in the corrective action plan.
Item 2023-007: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568, and 10.569 Federal award grant number: 204645, 203684, 236829, and 229353 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 14 reimbursement requests. The sample size of three was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted three instances in our sample size of three where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: Yes Recommendation: We recommend that SHNLFB implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHNLFB concurs with this finding and a response is included in the corrective action plan.
Item 2023-007: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568, and 10.569 Federal award grant number: 204645, 203684, 236829, and 229353 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 14 reimbursement requests. The sample size of three was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted three instances in our sample size of three where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: Yes Recommendation: We recommend that SHNLFB implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHNLFB concurs with this finding and a response is included in the corrective action plan.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Subrecipient Monitoring Audit Finding: Material Weakness Condition and Context The County received an allocation of the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) from the U.S. Department of the Treasury to support its response and recovery from the novel coronavirus. A portion of the County's allocation was then used to grant subawards to other entities (subrecipients) to carry out an eligible use. The County did not have policies and procedures in place to perform monitoring procedures of the subrecipients. The lack of internal controls was systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 VIGO COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County did not have adequate processes or procedures in place to ensure all required monitoring activities were conducted, as they were unaware of the requirements. Effect Due to the absence of policies and procedures to monitor the activities of subrecipients, subrecipients could have been spending federal funds for unauthorized purposes. As such, the County could not ensure proper accountability and compliance with the program requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County strengthen its system of internal controls to ensure that the County verified that all subrecipients of federal awards received an audit and that the County received and reviewed the audit reports of the subrecipients. Additionally, we recommended that the County strengthen its system of internal controls to ensure that subaward agreements include all required information that should be known to the subrecipient. 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 - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An internal control system, which would include segregation of duties, was not implemented at the County to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients were required to verify that contractors and subrecipients were not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification could be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. INDIANA STATE BOARD OF ACCOUNTS 19 VIGO COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County did not have policies and procedures in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. There were three vendors with whom the County entered into covered transactions during the audit period. No procedures were performed to ensure the vendors were not suspended or debarred or otherwise excluded or disqualified from participation in federal assistance programs or activities. Transactions for these three vendors during the audit period totaled $141,131. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management of the County had not developed a system of internal controls to ensure that policies and procedures were in place and followed, related to suspension and debarment, as they were unaware of the requirements. Effect Without proper implementation of an effectively designed system of internal controls, the County was unable to verify whether contractors and subrecipients were not suspended, debarred, or excluded. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. INDIANA STATE BOARD OF ACCOUNTS 20 VIGO 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 system of internal controls to ensure that verifications are performed to determine whether each contractor had been suspended or debarred from participating in federal contracts prior to making payment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Award Number and Award Year RW1 17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914. None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498. Criteria The 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year RW1 17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914. None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498. Criteria The 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year AL No. 93.958, 93.959 and 93.558, QG002 20, award year 7/1/2022 – 6/30/2024 AL No. 93.958, 93.959 and 93.558, ME015, award year 7/1/2022 – 6/30/2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context The Organization did not have adequate internal controls related to reporting of expenditures on the SEFA for Temporary Assistance for Needy Families, Block Grants for Community Mental Health Services, and Block Grants for Prevention and Treatment of Substance Abuse. Specifically, the Organization’s controls to reconcile expenditures from their internal tracking spreadsheets to the appropriate assistance listing numbers within the underlying grant/contract documentation, including the original contract and “Post Award Notices” (PAN) spreadsheets, were not operating as designed. As a result, the Organization determined that $2,601,106 of Temporary Assistance for Needy Families expenditures were incorrectly reported under the Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse programs. Possible Cause and Effect In discussing the condition with the Organization’s management, they stated it was caused by the use of an outdated PAN spreadsheet, which led to expenditures being incorrectly reported on the SEFA under the wrong ALN. Additionally, management review controls over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs None. Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its system of internal control to ensure that the SEFA is complete and accurate. View of Responsible Official Management agrees with the noted finding.
Finding 2023-004 Cash Management Information on the Federal Programs: Assistance Listing Numbers #98.001, #19.415 Criteria or Specific Requirement: Under 2 CFR 200.303, organizations that receive Federal funding are required to “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 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: Evidence of review/approval for certain drawdown requests could not be provided. The supporting documentation for certain requests (i.e. the schedule documenting the calculation for the amount requested) was also not available. While management asserts that a review and approval of drawdown requests occurred, there is no audit trail that shows the evidence of the control occurring. Cause: ICFJ experienced transition during the fiscal year and certain documents were unable to be located during the audit process. Effect or Potential Effect: Appropriate procedures and documentation for drawdown requests is important to ensure compliance with cash management compliance requirements. Questioned Costs: None. Context: Our audit procedures consisted of testwork performed over cash receipts and drawdown requests from the Federal Government. We consider our sample to be representative of the population. The condition appears to be systemic in nature. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend that management of ICFJ implement procedures and control processes to incorporate and document an independent review and approval, evidenced by a signature/initialing and date of the review and approval taking place prior to submission to the funder. Each request should be filed with the documentation supporting the calculation of the request.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles 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): IN0263 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context Prior to receipt of direct State and Local Fiscal Recovery Funds (SLFRF) award funds, all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the award terms and conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the City was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Activities Allowed or Unallowed, Allowable Costs/Cost Principles As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system. There was no evidence of segregation of duties, such as an oversight, review, or approval process related to these expenditures that would have ensured that expenditures of award funds were made only for activities and costs that were allowable under the federal award and federal regulations. The City passed Ordinance 2022-45 approving a "commitment of up to but not to exceed $400,000 for Infrastructure at the Junction." However, the City made no formal agreements for the payment of claims in relation to the "Junction" Project. Of the ten claims paid with SLFRF funds during 2023, two claims totaling $400,000 were for the "Junction" project. Both claims were paid without itemized invoices and adequate supporting documentation to support amounts paid. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the City did not ensure a proper system of internal controls was in place to accurately track expenditures for the SLFRF grant. In 2022, $2.5 million of SLFRF grant funds were transferred out of the City's SLFRF fund into the City of Logansport Project Fund at a financial institution in the name of the City (bank account) and were subsequently comingled with other nonfederal funds as part of a Build Operate Transfer (BOT) Agreement. Of this $2.5 million, $1,626,043 was spent during 2022, leaving $873,957 of the original $2.5 million to be spent in 2023. During 2023, the City disbursed $4,369,454 from its BOT bank account, where SLFRF and other funding sources were comingled without tracking which expenditures were expressly for the purpose of SLFRF. It was not possible to obtain a population of federal expenditures for the BOT expenditures due to this comingling; therefore, a portion of the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements could not be tested. Costs totaling $1,273,957 were not properly documented and were considered questioned costs. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . ." 2 CFR 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. . . ." 2 CFR 200.403(g) states in part: "Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: . . . (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." Cause Due to the lack of internal controls, the City was unable to differentiate expenditures made from federal and nonfederal funds once it commingled nonfederal funds and federal grant awards in a single bank account. Additionally, the City did not obtain appropriate supporting documentation for federal expenditures. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The City was unable to identify all the expenditures paid with federal funds and cannot ensure, nor can we determine, expenditures of the grant were not unallowable and adhered to established practices and polices. This could result in the misuse of funds and the potential loss of funding for future federal awards. Questioned Costs We identified $1,273,957 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the City establish a system of internal controls to ensure that grant award funds are accounted for and tracked in a designated grant fund. All activity of the grant should be in this fund with supporting documentation for each transaction. Additionally, the City should obtain appropriate supporting documentation for all federal grant expenditures. 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: Drinking Water State Revolving Fund (DWSRF) Cluster - Procurement and Suspension and Debarment Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW23150901 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 a policy that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in evaluation of bids or proposals. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Small Purchases The City expended federal funds to pay 12 separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. A population of 5 vendors had aggregated expenditures for the audit period that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. All 5 vendors were tested; for 2 of the 5 vendors, the City was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. The history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. Suspension and Debarment Prior to entering into subawards and covered transactions with award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the agreement with the Indiana Finance Authority (IFA), the City was not required to perform testing over suspension and debarment for a majority of the vendors used; however, several drawdowns from the State Revolving Funds (SRF) program were used to reimburse the City for payments made to specific vendors. The vendors paid directly by the City were not included in the IFA's procedures for checking suspension and debarment, therefore, the City was obligated to meet the requirement. The City did not maintain a set of procedures for checking suspension and debarment status of vendors for expenditures related to the SRF awards. A total of two vendors paid directly by the City exceeded the suspension and debarment threshold of $25,000 and were subject to testing. No documentation to show that suspension and debarment was verified prior to entering into the contract could be provided for either vendor. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." Cause The City did not maintain a procurement policy that would demonstrate the appropriate procedures to be followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement or suspension and debarment for expenditures associated with the SRF awards. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services or providing federal funds to an entity that is suspended or debarred. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the City. INDIANA STATE BOARD OF ACCOUNTS 25 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award and ensure that vendors paid from federal funds are neither suspended nor debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.