Finding Text
FINDING 2021-006
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Numbers and Years (or Other Identifying Numbers): Regular FY 2021,
Revenue Loss FY 2021
Compliance Requirement: Procurement and Suspension and Debarment
Audit Finding: Material Weakness, Modified Opinion
Condition and Context
An effective internal control system, which would include segregation of duties, was not in place at
the County in order to ensure compliance with requirements related to the grant agreement and the
procurement and suspension and debarment compliance requirement.
INDIANA STATE BOARD OF ACCOUNTS 28
LA PORTE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Prior to entering into subawards and covered transactions with Coronavirus State and Local Fiscal
Recovery Funds (CSLFRF), SLFRF funds, recipients are required to verify that contractors and
subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are
not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant
agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done
by checking the Excluded Parties List System (ELPS), collection of a certification from that person or entity,
or adding a clause or condition to the covered transaction with that person or entity.
Upon inquiring of the County to determine its policies and procedures related to suspension and
debarment requirements for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), SLFRF
funds, the County stated procedures were not in place to ensure vendors were not suspended or debarred
prior to entering into covered transactions.
The County had not performed procedures to ensure the vendors were not suspended or debarred
or otherwise excluded or disqualified from participation in federal assistance programs or activities during
the audit period on 100 percent of the applicable two vendors that were paid with SLFRF funds, which
totaled $657,583.
The lack of internal controls and noncompliance were systemic issues 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). . . ."
31 CFR 19.300 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 do business is not excluded or disqualified. You do this
by:
(a) Checking the EPLS, or
(b) Collecting a certification from that person if allowed by this rule, or
(c) Adding a clause or condition to the covered transaction with that person."
Cause
Management of the County did not develop a system of internal controls to ensure that policies and
procedures were in place and followed, related to suspension and debarment.
INDIANA STATE BOARD OF ACCOUNTS 29
LA PORTE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified
to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay
contractors that have been suspended or debarred would be unallowable, and the funding agency could
potentially recover them. Furthermore, 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 establish a proper system of internal controls,
including policies and procedures to ensure its compliance with requirements related to suspension and
debarment.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.