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FINDING 2025-002 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): FY2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2024-002. Condition and Context Recipients of the COVID-19 - State and Local Fiscal Recovery Funds are required to verify before entering into subawards and covered transactions that 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, such as a grant agreement, when the value is expected to equal or exceed $25,000. Verification may be performed by checking the Excluded Parties List System, obtaining a certification from the entity, or including an appropriate clause or condition in the transaction. The County did not have procedures in place to verify that entities were not suspended, debarred, or otherwise excluded from participation in federal assistance programs. The lack of internal controls and noncompliance 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 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." Part 4 of the Treasury's Compliance and Reporting Guidance states in part: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause Management did not design an adequate system of internal controls. The County was unable to provide documentation demonstrating the verification that contractors and vendors were not suspended or debarred. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system could not effectively prevent, or detect and correct, material noncompliance. As a result, vendors receiving payments equal to or exceeding $25,000 were not verified to ensure they were not suspended, debarred, or otherwise excluded. Noncompliance with federal statutes, regulations, and terms and conditions of federal awards 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 strengthen its internal control system to ensure that all vendors receiving payments of $25,000 or more, in whole or in part with federal funds, are verified as not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.