Finding Text
FINDING 2023-004
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Years (or Other Identifying Number): 2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
21
JEFFERSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-003.
Condition and Context
Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State
and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such
contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions"
include, but are not limited to, contracts for goods and services awarded under a nonprocurement
transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be
done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or
adding a clause or condition to the covered transaction with that person.
The County did not have any policies or procedures in place related to the suspension and
debarment requirements. A population of three covered transactions, totaling $145,166, that equaled or
exceeded $25,000 paid from SLFRF funds were identified. All three covered transactions were selected
for testing. For each of the three transactions, the County did not verify the vendors' suspension or
debarment status prior to payment due to the County not having any policies or procedures in place to
verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from
participating in federal assistance programs or activities.
The lack of internal controls and noncompliance were systemic throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides
reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
31 CFR 19.300 states:
"When you enter into a covered transaction with another person at the next lower tier, you must
verify that the person with whom you intend to do business is not excluded or disqualified. You
do this by:
(a) Checking the EPLS; or
(b) Collecting a certification from that person if allowed by this rule; or
(c) Adding a clause or condition to the covered transaction with that person."
INDIANA STATE BOARD OF ACCOUNTS
22
JEFFERSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
The County's purchasing policy does not include procedures to verify suspension and debarment
status for covered transactions it intends to pay with federal funds. The County was not aware of the
suspension and debarment requirements at the time the covered transactions were entered into. Furthermore,
due to the timing of the prior audit completion, corrective actions, as outlined in the County's
corrective action plan for item 2022-003, could not be implemented in time to correct the noncompliance
for this audit period.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
County cannot ensure that contractors paid with federal funds are eligible to participate in federal programs.
Any program funds the County used to pay contractors that have been suspended or debarred would be
unallowable, and the funding agency could potentially recover them.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the County.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County establish a proper system of internal controls,
including strengthening its policies and procedures, to ensure that all contractors that are paid $25,000 or
more, all or in part with federal funds, are not suspended or debarred from participating in federal programs
before entering into contracts.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.