Finding 1061587 (2023-001)

FINDING 2023-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY-2023 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 13 MORGAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County was awarded $13,691,662 in State and Local Fiscal Recovery Funds (SLFRF) to respond to the COVID-19 pandemic. The Board of County Commissioners were placed in charge of the grant funds and ensuring compliance with the grant. To ensure SLFRF expenditures were allowable and adhered to the cost principles, the County established the following process: first, the expenses were preapproved by the County Administrator; next, the claim was prepared by the Board of County Commissioners' Executive Assistant or the County Administrator; then the claim was reviewed and approved for compliance with the grant requirements by a County Commissioner; finally, the County Auditor approved the expenditure for payment. All expenditures paid with SLFRF funds were selected for testing to determine if the internal control was operating effectively. For 3 of the 22 expenditures tested, a County Commissioner did not sign the claim. The claims not signed by a County Commissioner were in June (1) and December (2). The lack of internal controls was isolated to the three claims identified above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not consistently documented at the County. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County review and strengthen its system of internal controls, to ensure appropriate reviews, approvals, and oversight are taking place. INDIANA STATE BOARD OF ACCOUNTS 14 MORGAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.