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FINDING 2025-003 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): FY 2025 Compliance Requirement: Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 GRANT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery (SLFRF) Funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (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. During the audit we identified seven vendors associated with contracts and covered transactions. A sample of two vendors were examined to determine whether the County verified the suspension and debarment status prior to payment. The County had not verified vendor's suspension and debarment status for either of the vendors tested prior to issuing payment. The lack of internal controls and noncompliance were systematic 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 This condition arose because the County lacked documented procedures requiring suspension and debarment verification during the contracting process. Procurement staff were not consistently performing eligibility checks or including the necessary federal clauses in contracts for BW Construction and J&K Communications. Consequently, the County did not have effective internal controls to ensure vendors were eligible to receive federal funds at the time contracts were executed. INDIANA STATE BOARD OF ACCOUNTS 18 GRANT COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect As a result of this issue, the County may be unable to support the SLFRF funds that were used in accordance with federal regulations, creating the potential for repayment or other corrective action. The deficiency also weakens overall accountability and could impact the County's reliability in managing future federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County review and evaluate internal controls over federal programs to ensure compliance with requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.