FINDING 2023-001
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): 2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
13
LAGRANGE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-002.
Condition and Context
The County elected to receive the standard revenue loss allowance, allowing the County to claim
its total State and Local Fiscal Recovery Funds (SLFRF) allocation of $7,694,555 as revenue loss to use
for government services. As such, all SLFRF program funds were expended under the revenue loss eligible
use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards
under this eligible use category and that recipients' use of revenue loss funds would not give rise to
subrecipient relationships given that there is no federal program or purpose to carry out in the case of the
revenue loss portion of the award.
Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are
required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise
excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded
under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification
from that person or entity, or adding a clause or condition to the covered transaction with that person or
entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise
to subawards, the County was only required to comply with suspension and debarment requirements
related to covered transactions.
Upon inquiry of the County's policies and procedures related to suspension and debarment requirements,
the County disclosed its process for the County Auditor to ensure that the agreements or contracts
include language related to suspension and debarment. Four covered transactions for goods or services
that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were selected
for testing. Each transaction was examined to determine whether the County verified the suspension and
debarment status of the vendor prior to payment.
The first covered transaction, in the amount of $304,263, was made to a contractor for the purchase
of three building generators. While the contract was reviewed and approved by a County official, no suspension
or debarment clause was present in the contract. As such, the County did not verify the vendor was
neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance
programs or activities prior to payment.
The second covered transaction, in the amount of $56,338, was made for the purchase of the
commissioner's room audio video upgrades. While the contract was reviewed and approved by a County
official, no suspension or debarment clause was present in the contract. As such, the County did not verify
the vendor was neither suspended nor debarred, or otherwise excluded or disqualified, from participating
in federal assistance programs or activities prior to payment.
The third covered transaction, in the amount of $126,737, was made for the construction of a 4-H
fairgrounds home. The contract was reviewed and approved by a County official and included a suspension
or debarment clause.
The fourth covered transaction, in the amount of $27,661, was made for the construction of a new
park pavilion. While the contract was reviewed and approved by a County official, no suspension or
debarment clause was present in the contract. As such, the County did not verify the vendor was neither
suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance
programs or activities prior to payment.
INDIANA STATE BOARD OF ACCOUNTS 14
LAGRANGE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
After the last audit, the County established procedures to include a suspension and debarment
clause in agreements or contracts. However, the County did not amend agreements or contracts entered
into prior to the implementation of this policy.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County cannot ensure the contractors paid with federal funds are eligible to participate in federal programs.
Any program funds the County used to pay contractors that have been suspended or debarred would be
unallowable, and the funding agency could potentially recover them.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County strengthen its system of internal controls to
ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended,
debarred, or otherwise excluded from participating in federal programs prior to entering into any contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.