Finding Text
FINDING 2021-005
Subject: Highway Planning and Construction - Procurement
Federal Agency: U.S. Department of Transportation
Federal Program: Highway Planning and Construction Cluster
Assistance Listings Number: 20.205
Federal Award Numbers and Years (or Other Identifying Numbers): DES #1702829, DES #1801831,
DES #1401027, DES #1592335,
DES #1592338, DES #1902029,
DES #1902197, DES #1902815,
DES #1902818
Pass-Through Entity: Indiana Department of Transportation
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
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 the Local Public Agency
(LPA) Selection Review Checklist was properly supported. The lack of internal controls resulted in noncompliance.
For consultant contracting (engineering and design related services) the Local Public Agency
(LPA), (La Porte County) will create and send a Request for Proposal (RFP) to the Indiana Department of
Transportation (INDOT), who will review and advertise them. Consultants can then respond to those RFPs
by completing and submitting a Letter of Interest (LOI). After all LOIs are received and ranked, the County
reports the number of LOIs received on the LPA Selection Review Checklist. The County did not keep or
maintain the LOIs as reported to the INDOT on the LPA Selection Review Checklist. As a result, the number
of LOIs documented on the checklist provided to the INDOT could not be verified or audited. In addition,
we were unable to ensure the minimum number of LOIs were received to meet the procurement competition
standards.
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 27
LA PORTE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
49 CFR 18.36(9) states:
"Grantees and subgrantees will maintain records sufficient to detail the significant history of a
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."
Cause
Management did not develop a system of internal controls to maintain records sufficient to detail
the history of a procurement as required by retaining the LOIs.
Effect
The failure to establish an effective internal control system places the County at risk of
noncompliance with the grant agreement and the compliance requirements and resulted in a Qualified
Opinion. 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 the County's management design and implement a proper system of
internal controls to ensure the County retains the LOIs to ensure compliance with procurement requirements.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.