Finding Text
FINDING 2023-005
Subject: Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and
Debarment
Federal Agency: U.S. Department of Treasury
Assistance Listing Number: 21.027
Federal Award Number: WW21368901 and FY 2021
Pass-Through Entity: Indiana Finance Authority for WW21368901 and FY 2021 grant was direct
Compliance Requirements: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Internal Controls
Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award 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 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 section 200.303 states in part: "The non-Federal entity must use one of the following methods of
procurement…
(b) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an appropriate
simplified acquisition threshold based on internal controls, an evaluation of risk and its documented
procurement procedures which must not exceed the threshold established in the FAR. When applicable, a
lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited
under State, local, or tribal laws or regulations.
Condition: An effective internal control system was not in place at the Town in order to ensure compliance
with requirements related to the grant agreement and the simplified acquisitions procurement method of
the Procurement and Suspension and Debarment compliance requirement.
Cause: Management had not established a system of internal control that would have ensured proper
procurement procedures are followed.
Context: For one procurement, we noted that the Town had one procured contract for $576,092 that met
the simplified acquisition threshold and one contract for $35,880 that met the small purchase method
threshold. The Town performed adequate procurement steps for the contract that met the simplified
acquisition threshold but did not for the contract that met the small purchase method threshold. For the
contract that fell under the small purchase method, management had support for one quote and noted that
a second quote was obtained verbally. Management’s procurement policy states that three quotes must be
obtained, and the contract must be awarded to the lowest bid. Management did not document the basis for
purchasing from the vendor that was utilized. Additionally, for the contract that met the simplified acquisition
threshold, management did not provide support indicating that the Town verified the vendor was not
suspended or debarred. The Town verified that the vendor selected for the small purchase method was not
suspended or debarred.
Effect: The failure to establish an effective internal control system enabled noncompliance with the grant
agreement and the simplified acquisition procurement method of the Procurement and Suspension and
Debarment compliance requirement.
Identification as a repeat finding, if applicable: No
Recommendation: We recommended that the Town’s management establish controls related to the grant
agreement and the simplified acquisition purchase procurement method of the Procurement and
Suspension and Debarment compliance requirement.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.