Finding 497933 (2023-003)

FINDING 2023-003 Subject: Internal Controls over COVID-19 - Coronavirus State and Local Fiscal Recovery Funds: Lead Reduction Grant 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): FY23-24 Pass-Through Entity: Indiana State Department of Health Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The County received a secondary award of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) that was passed through from the Indiana State Department of Health for purposes of lead reduction in the County. The invoices submitted to the state to request reimbursement for the deliverables performed by the County were the only reports required under this portion of the SLFRF award funding. The County submitted one invoice for reimbursement to the state during the audit period; however, one employee in the County Health Department prepared and submitted the invoice without evidence of an oversight, review, or approval process to ensure that the report was accurate. The lack of internal controls was a systemic issue 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 18 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County'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, 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 County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight of federal reports are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.