Finding Text
FINDING 2023-002
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment
Federal Agency: Department of the Treasurer
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Numbers): FY 2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
Prior to entering into subawards and covered transactions with the Coronavirus State and Local
Fiscal Recovery Funds (SLFRF) awards funds, recipients are required to verify that such contractors and
subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are
not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant
agreement) that are expended to equal or exceed $25,000. The verification is to be done by checking the
Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or
condition to the covered transaction with that person.
The County's policies related to SLFRF suspension and debarment requirement included checking
the EPLS for vendor suspension and debarment. Of the 16 covered transactions, totaling $3,039,637.60,
identified that were paid from the SLFRF funds during the audit period, 3 were selected for testing to verify
the County followed its procedures related to suspension and debarment.
Of the 3 covered transaction tested, 1 did not follow the County's procedures as outlined above.
The 1 covered transaction, totaling $47,283, did not include the appropriate provisions in the contracts nor
did the County require a certification or check the EPLS to ensure the entity was not suspended or debarred
prior to making payment.
The lack of internal controls and noncompliance were isolated to the transaction noted above.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
2 CFR 200.214 states:
"Non-federal entities contractors are subject to the non-procurement debarment and
suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180.
The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain
parties that are debarred, suspended, or otherwise excluded from or ineligible for participation
in Federal assistance programs or activities."
INDIANA STATE BOARD OF ACCOUNTS 16
HOWARD COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You do
this by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
The system of internal controls as established by management of the County was not properly
implemented to ensure that the policies and procedures in place related to suspension and debarment were
appropriately followed. The County did not verify for one covered transaction identified in testing that the
entity was not suspended or debarred prior to entering into the covered transaction.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County could not ensure the vendors paid with federal funds were eligible to participate in federal programs.
Any program funds the County used to pay vendors that have been suspended or debarred would be
unallowable, and the funding agency could potentially recover them.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the County.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended the County strengthen its system of internal controls to ensure vendors that are
paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in
federal programs before entering into any covered transactions.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.