Finding Text
FINDING 2022-004
Subject: CDBG - Entitlement Grants Cluster - Reporting
Federal Agency: Department of Housing and Urban Development
Federal Programs: Community Development Block Grants/Entitlement Grants; COVID-19 -
Community Development Block Grants/Entitlement Grants
Assistance Listings Number: 14.218
Federal Award Numbers and Years (or Other Identifying Numbers): B-11-UN-18-0002, B-17-UC-18-0016,
B-18-UC-18-0016, B-19-UC-18-0016,
B-20-UC-18-0016, B-21-UC-18-0016,
B-20-UW-18-0016
Compliance Requirement: Reporting
Audit Finding: Material Weakness
Condition and Context
The County did not have internal control procedures over the Quarterly Reports (PR29), the IDIS
Section 3 Performance Report, and the NSP Quarterly Reports. One individual prepared or generated the
report without a review or oversight process.
INDIANA STATE BOARD OF ACCOUNTS
23
LAKE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Additionally, the County's internal controls were not consistently documented over the drawdown
requests for the CDBG grant during the audit period. The drawdown requests were entered into the IDIS,
which then became the basis for several of the reports. The internal control presented by the County was
that one individual prepared and entered the request, which would then be printed, and another individual
would review and sign the printed request to document the review. Of the 13 reimbursement requests
tested, internal control documentation for 8 of the requests was printed and signed during the current period,
after the documentation was requested. The creation of documentation of the internal control procedure
did not support that internal controls were properly implemented and effective during the audit period.
The lack of internal controls 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). . . ."
2 CFR 200.1 states in part:
". . . Internal controls for non-Federal entities means:
(1) Processes designed and implemented by non-Federal entities to provide reasonable
assurance regarding the achievement of objectives in the following categories:
(i) Effectiveness and efficiency of operations;
(ii) Reliability of reporting for internal and external use; . . ."
Cause
A turnover of staff in the County's Community Development office, and management not ensuring
that a system of internal controls that segregated key functions was designed, implemented, and operating
effectively, contributed to the program income issue identified above.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. 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.
INDIANA STATE BOARD OF ACCOUNTS
24
LAKE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the County's management design and implement a proper system of
internal controls, and retain documentation of its system of internal controls, to ensure compliance with
reporting requirements.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.