Finding 388152 (2023-010)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2023
Accepted
2024-03-28

AI Summary

  • Core Issue: Lack of effective internal controls over procurement processes, leading to inadequate documentation and compliance risks.
  • Impacted Requirements: Non-compliance with 2 CFR 200.303, 200.318(i), and 200.320(b) regarding procurement documentation and contractor verification.
  • Recommended Follow-Up: Management should implement a robust internal control system with clear policies and procedures to ensure proper documentation and compliance with federal requirements.

Finding Text

FINDING 2023-010 Information on the federal program: Federal Agency: Department of the Treasury Pass-Through Entity: The Indianapolis Foundation and The City of Indianapolis Federal Program: Coronavirus State and Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Internal Controls 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 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320(b) states: "Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." 2 CFR 180.300 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 SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: For one selected procurement, EmployIndy was unable to provide support indicating review of procurement documents. Cause: A proper system of internal controls was not implemented by management of the Organization, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Organization’s management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect: Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, 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 organization. Questioned costs: There are no questioned costs. Context: Management was unable to provide adequate support indicating preparation and review of procurement and suspension and debarment documents for the Plaid Agency. Crowe was only able to view the bid request and bid. Documents indicating rationale for awarding the contract were not provided. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: We recommend that management establish a proper system of internal control and develop policies and procedures to ensure all required documentation is retained and provided for purchases and to ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.

Corrective Action Plan

Description of Corrective Action Plan: Prior to the completion of this audit, EmployIndy already made a number of changes to its financial operations. It parted ways with its Chief Financial Officer and procured the services of an outside Certified Public Accounting firm to begin the process of reviewing and updating its financial operations. In addition, it hired an Executive Vice President of Finance and Operations to lead the final development and implementation of updated financial processes. The Executive Vice President of Finance and Operations has worked with EmployIndy’s Board of Directors and Finance Committee to document a plan for improving EmployIndy’s financial operations across the board by the 2nd quarter of Calendar Year 2024. To ensure compliance with competitive procurement documentation requirements, EmployIndy will review and update, as necessary, its procurement processes, reflecting that in cases where competitive procurement of a vendor is performed by a partner organization that EmployIndy receive and retain all necessary documentary support. In addition, Grants and Contracts staff will complete retraining on competitive procurement requirements. Responsible Party and Timeline for Completion: Corrective Activity Responsible Party Timeline for Completion Review and update competitive procurement procedures to ensure documentary requirements for competitive procurements performed by partners are well-defined. Associate Director of Grants & Contracts 2nd Quarter of Calendar Year 2024 Complete updated training on competitive procurement documentation requirements Associate Director of Grants & Contracts and Grants & Contracts Manager By 3rd Quarter of Calendar Year 2024 Hold Grants and Contracts staff are accountable for collecting and retaining required documents in scenarios where a partner completes competitive procurement of vendor(s) used by EmployIndy Executive Vice President of Finance and Operations Ongoing

Categories

Procurement, Suspension & Debarment Subrecipient Monitoring

Other Findings in this Audit

  • 388133 2023-005
    Material Weakness Repeat
  • 388134 2023-005
    Material Weakness Repeat
  • 388135 2023-005
    Material Weakness Repeat
  • 388136 2023-005
    Material Weakness Repeat
  • 388137 2023-006
    Material Weakness Repeat
  • 388138 2023-006
    Material Weakness Repeat
  • 388139 2023-006
    Material Weakness Repeat
  • 388140 2023-006
    Material Weakness Repeat
  • 388141 2023-007
    Material Weakness Repeat
  • 388142 2023-007
    Material Weakness Repeat
  • 388143 2023-007
    Material Weakness Repeat
  • 388144 2023-007
    Material Weakness Repeat
  • 388145 2023-008
    Material Weakness Repeat
  • 388146 2023-008
    Material Weakness Repeat
  • 388147 2023-008
    Material Weakness Repeat
  • 388148 2023-008
    Material Weakness Repeat
  • 388149 2023-009
    Material Weakness
  • 388150 2023-009
    Material Weakness
  • 388151 2023-009
    Material Weakness
  • 388153 2023-010
    Significant Deficiency
  • 388154 2023-010
    Significant Deficiency
  • 964575 2023-005
    Material Weakness Repeat
  • 964576 2023-005
    Material Weakness Repeat
  • 964577 2023-005
    Material Weakness Repeat
  • 964578 2023-005
    Material Weakness Repeat
  • 964579 2023-006
    Material Weakness Repeat
  • 964580 2023-006
    Material Weakness Repeat
  • 964581 2023-006
    Material Weakness Repeat
  • 964582 2023-006
    Material Weakness Repeat
  • 964583 2023-007
    Material Weakness Repeat
  • 964584 2023-007
    Material Weakness Repeat
  • 964585 2023-007
    Material Weakness Repeat
  • 964586 2023-007
    Material Weakness Repeat
  • 964587 2023-008
    Material Weakness Repeat
  • 964588 2023-008
    Material Weakness Repeat
  • 964589 2023-008
    Material Weakness Repeat
  • 964590 2023-008
    Material Weakness Repeat
  • 964591 2023-009
    Material Weakness
  • 964592 2023-009
    Material Weakness
  • 964593 2023-009
    Material Weakness
  • 964594 2023-010
    Significant Deficiency
  • 964595 2023-010
    Significant Deficiency
  • 964596 2023-010
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
17.259 Wia Youth Activities $1.75M
17.258 Wia Adult Program $1.22M
21.027 Coronavirus State and Local Fiscal Recovery Funds $718,290
17.225 Unemployment Insurance $711,000
17.278 Wia Dislocated Worker Formula Grants $516,485
17.277 Covid-19 - Workforce Investment Act (wia) National Emergency Grants $253,114
17.285 Apprenticeship USA Grants $143,711
14.218 Community Development Block Grants/entitlement Grants $129,943
17.207 Employment Service/wagner-Peyser Funded Activities $120,000
84.425 Education Stabilization Fund $113,633
84.126 Rehabilitation Services_vocational Rehabilitation Grants to States $95,094