Finding Text
FINDING 2025-003 Subject: Highway Planning and Construction - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Numbers and Years (or Other Identifying Numbers): DES 1400550, DES 1700788, DES 2100081 Pass-Through Entity: Indiana Department of Transportation Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed nor implemented at the County in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The County had not properly designed or implemented a system of internal controls that would be effective in preventing, or detecting and correcting, noncompliance to ensure that expenses reimbursed with Highway Planning and Construction monies were not charged to another federal grant. INDIANA STATE BOARD OF ACCOUNTS 18 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The following instances of noncompliance were identified during the audit of project DES 1700788: Duplicate Federal Funding (Double Dipping): Two of eight expenses sampled from the Highway Planning and Construction program were found to be originally charged to the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) federal program (ALN 21.027) and subsequently submitted and received as reimbursement through the Highway Planning and Construction program. A further comprehensive review of Highway Planning and Construction funds reimbursed in 2025 revealed that $965,722 in expenditures originally charged to the SLFRF in 2024 was subsequently requested and received as a reimbursement through Highway Planning and Construction in 2025. Additionally, $17,000 in expenditures originally charged to the SLFRF in 2025 was subsequently requested and received as a reimbursement through Highway Planning and Construction in 2025. Duplicate Project Reimbursement Requests: One check was included in two separate Highway Planning and Construction reimbursement claims, resulting in the County receiving duplicate payments for the exact same expenditure under the Highway Planning and Construction program in 2025. The lack of an effective internal control system was systemic throughout the audit period, while the identified noncompliance was specific to project DES 1700788. Total known questioned costs, resulting from the duplicate federal funding, equal $982,722. 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. . . ." 2 CFR 200.405(c) states in part: "Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards . . ." 2 CFR 200.402 states: "The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs minus any applicable credits." INDIANA STATE BOARD OF ACCOUNTS 19 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County did not establish, implement, and enforce a formal grant management and review process capable of cross-referencing ledger expenditures between different federal grants. Furthermore, the County lacked a tracking mechanism to flag individual vendor checks and invoices to prevent them from being submitted for reimbursement multiple times. Effect Without a proper system of internal controls in place that operated effectively, the County requested and received reimbursement for $982,722 from the Highway Planning and Construction program that had already been charged to the SLFRF federal program. Additionally, the County asked for reimbursement for the same check on two different reimbursement claims. Questioned Costs Questioned costs in the amount of $982,722 were identified as described in the Condition and Context. Recommendation We recommended that County management implement an effective internal control system and formal procedures to prevent duplicate reimbursement requests across different grant programs. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.