Finding Text
FINDING 2022-005
Subject: CDBG - Entitlement Grants Cluster - Period of Performance
Federal Agency: Department of Housing and Urban Development
Federal Program: 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
Compliance Requirement: Period of Performance
Audit Finding: Material Weakness
Condition and Context
The County did not have internal control procedures over adjustments to Community Development
Block Grants/Entitlement Grants funds. During and after the transition to a new financial accounting
software system for the County, various adjusting entries were entered by outside consultants without any
oversight or review by County management.
The lack of internal controls was a systematic issue from July 1, 2022 to December 31, 2022.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS
25
LAKE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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
The conversion process due to the change in financial software in the middle of year 2022 caused
abnormal activity which was not a part of the system of internal controls as designed and implemented by
the County.
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.
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
period of performance requirements.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.