Finding Text
FINDING 2025-004 Subject: Highway Planning and Construction - Procurement 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 Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context The County, acting as the Local Public Agency (LPA), did not maintain adequate internal controls over its procurement process for professional engineering and consulting contracts funded by the Highway Planning and Construction program. Specifically, for the consulting contracts reviewed during the audit period, the designated Employee in Responsible Charge was the sole individual documented as responsible for completing, reviewing, and submitting the LPA Selection Checklist to the Indiana Department of Transportation (INDOT). No secondary review, approval, or independent verification of the checklist or the required contract reporting items was documented or presented for audit. INDIANA STATE BOARD OF ACCOUNTS 20 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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). . . ." Cause No documentation was provided to ensure a proper internal control process that would include an independent oversight review or dual-signature sign-off on the LPA Selection Checklist prior to its submission to the INDOT. During the audit period, the County office responsible for the Highway Planning and Construction program experienced staff turnover, resulting in a breakdown of internal controls. Effect The lack of an effective internal control could lead to material noncompliance going undetected. This lack of documented internal controls constitutes a material weakness in internal control over compliance. Material noncompliance could lead to loss of federal funding for the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County management establish an internal control system and formal procedures to ensure consulting contracts are properly procured and that the LPA Selection Checklist review is thoroughly documented. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.