Finding 8628 (2022-002)

Significant Deficiency Repeat Finding
Requirement
I
Questioned Costs
-
Year
2022
Accepted
2024-01-16
Audit: 11782
Organization: St. Joseph County (IN)
Auditor: Forvis LLP

AI Summary

  • Core Issue: The County failed to consistently verify that contracted vendors were not suspended or debarred, violating federal procurement requirements.
  • Impacted Requirements: Non-compliance with 31 CFR § 19.300 and 2 CFR 200.303 regarding internal controls and vendor eligibility.
  • Recommended Follow-up: Ensure proper documentation is maintained, such as using the Excluded Parties List System, to confirm vendor eligibility and compliance.

Finding Text

Federal Agency: U.S. Department of Treasury Federal Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing Number 21.027 Federal Award Program Year: January 1, 2022 - December 31, 2022 Pass-through Agency: Indiana Finance Authority Pass-through Number: Unknown Type of Finding: Significant Deficiency Criteria or Specific Requirement - Procurement, Suspension and Debarment: Pursuant to 31 CFR § 19.300, non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended and debarred or whose principals are suspended or debarred. The non-Federal entity must verify that the contracted entity is not suspended or debarred or otherwise excluded. In addition, pursuant to 2 CFR 200.303, which states in part, the non-Federal entity must establish and maintain an effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with the 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 of the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission. Condition: The County could not provide support that it had reviewed the "List of Parties Excluded from Federal Procurement and Nonprocurement Programs" during their procurement procedures on a consistent basis. The County had not properly designed or implemented a system of internal controls which would include appropriate segregation of duties that would likely be effective in preventing, detecting and correcting noncompliance. Questioned Costs: None Context: It was noted that the two files selected for testing did not have documented evidence supporting that the County had determined that the contracted parties were not suspended or debarred. From a population of thirteen files, two were selected for testing. Our sample was not intended to be statistically valid. Effect: The County was unable to support vendors were not suspended or debarred. Cause: Failure to maintain sufficient procurement records. Identification as a Repeat Finding: Yes Recommendation: We recommend that the County maintain adequate documentation to ensure compliance with the suspension and debarment requirement. This documentation could include a print out from the Excluded Parties List System maintained by the General Services Administration, collection of a certification from the contracted party, or adding a clause or condition to the covered transaction with the contracted party. Views of Responsible Officials and Planned Corrective Action: The County is aware of the compliance requirement and has implemented additional procedures, including certain of those identified in the recommendation above, to be able to support suspension and debarment processes are in place. Persons responsible for implementing: Abby Doyle, Chief Deputy Auditor Anticipated completion date: Completed.

Corrective Action Plan

Views of Responsible Official: We concur with the audit finding with respect to the failure of having processes and procedures in place to prohibit from contracting with or making subawards under covered transactions to parties that are suspended and debarred or whose principals are suspended or debarred. Description of Corrective Action Plan: Currently, the County requires all new vendors to complete the attached “Vendor Registration Form”. On page 5 the vendor acknowledges they have not or are currently not suspended and debarred. A new step that Procurement implemented as of July 14, 2023 was verification of vendor’s status on sam.gov and attaching the screenshot to the LOW system. Procurement will update their vendor policy to specifically include this step. On July 14, 2023, County Attorney issued a statement enforcing the following verbiage to be added to all contracts. Debarment and Suspension: 1. Contractor certi¿es, by entering into this Agreement, that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from or ineligible for participation in any Federal assistance program by and Federal department or agency, or by any department, agency, or political subdivision of the State of Indiana. The term “principal” for purposes of the Agreement means an o¿cer, director, owner, partner, key employee, or the person with primary management or supervisory responsibilities, or a person who has a critical in¿uence on or substantive control over the operation of the Contractor. 2. Contractor certi¿es, by entering into this Agreement, that is does not engage in investment activities in Iran as more particularly described in IC 5-22-16.5. 3. Contractor shall provide immediate written notice to County if, at any time after entering into this Agreement, Contractor learns that its certi¿cations were erroneous when submitted, or Contractor is debarred, suspended, proposed for debarment, declared ineligible, has been included on a list or received notice of intent to include on a list created pursuant to IC 5-22-16.5, voluntarily excluded from or becomes ineligible for participation in any Federal assistance program. Any such event shall be cause for termination of this agreement as provided herein. 4. Contractor shall not subcontract with any party which is debarred or suspended or is otherwise excluded from on ineligible for participation in any Federal assistance programs by any federal department or agency, or by any department, agency or political subdivision of the State of Indiana. Next, the County Attorney provided guidance to all departments to verify vendors prior to engaging in a contract. Below is the verbiage from the County Attorney to staff on July 14, 2023. The state has asked us to verify that the entity we are contracting with is not debarred by visiting the following websites and running a search: https://sam.gov/content/exclusions https://www.in.gov/idoa/procurement/supplier-resource-center/supplier-responsibilities/ Termination for Failure of Funding: Notwithstanding any other provision of this Agreement, if funds for the continued fulfillment of this Agreement by County are at any time insufficient or not forthcoming through a failure of any entity to appropriate funds or otherwise, then the County shall have the right to terminate this Agreement without penalty by giving written notice documenting the lack of funding, in which instance this Agreement shall terminate and become null and void on the last day of the fiscal period for which appropriations were received. County agrees to make its best efforts to obtain sufficient funds, including but not limited to, requesting in its budget for each fiscal period during the term hereof sufficient funds to meet its obligations hereunder in full. For public works projects: Compliance with E-verify Program. Pursuant to IC 22-5-1.7, Consultant shall enroll in and verify the work eligibility status of all newly hired employees of Consultant through the E-Verify Program (“Program”). Consultant is not required to verify the work eligibility status of all newly hired employees through the Program if the Program no longer exists. Consultant and its subcontractors shall not knowingly employ or contract with an unauthorized alien or retain an employee or contract with a person that Consultant or its subcontractor subsequently learns is an unauthorized alien. If Consultant violates this Section, County shall require Consultant to remedy the violation not later than thirty (30) days after County notifies Consultant. If Consultant fails to remedy the violation within the thirty (30) day period, County shall terminate the contract for breach of contract. If County terminates the contract, Consultant shall, in addition to any other contractual remedies, be liable to County for actual damages. There is a rebuttable presumption that Consultant did not knowingly employ an unauthorized alien if Consultant verified the work eligibility status of the employee through the Program. If Consultant employs or contracts with an unauthorized alien but County determines that terminating the contract would be detrimental to the public interest or public property, County may allow the contract to remain in effect until County procures a new contractor. Consultant shall, prior to performing any work, require each subcontractor to certify to Consultant that the subcontractor does not knowingly employ or contract with an unauthorized alien and has enrolled in the Program. Consultant shall maintain on file a certification from each subcontractor throughout the duration of the Project. If Consultant determines that a subcontractor is in violation of this Section, Consultant may terminate its contract with the subcontractor for such violation. Pursuant to IC 22-5-1.7 a fully executed affidavit affirming that the business entity does not knowingly employ an unauthorized alien and confirming Consultant’s enrollment in the Program, unless the Program no longer exists, shall be filed with County prior to the execution of this Agreement. This Agreement shall not be deemed fully executed until such affidavit is filed with the County. Lastly, the Commissioner’s Assistant will check incoming contracts from departments to ensure proper documentation is attached that verifies the vendor has been checked through sam.gov and in.gov. Once the contract has been approved by the Commissioners, the Auditor’s office will then upload the contract and supporting documents onto Gateway. Completion Date: December 20, 2023

Categories

Procurement, Suspension & Debarment Internal Control / Segregation of Duties

Other Findings in this Audit

  • 8629 2022-002
    Significant Deficiency Repeat
  • 8630 2022-003
    Significant Deficiency
  • 8631 2022-003
    Significant Deficiency
  • 585070 2022-002
    Significant Deficiency Repeat
  • 585071 2022-002
    Significant Deficiency Repeat
  • 585072 2022-003
    Significant Deficiency
  • 585073 2022-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.563 Child Support Enforcement $4.46M
21.023 Emergency Rental Assistance Program $1.53M
93.495 Community Health Workers for Public Health Response and Resilient $829,677
93.268 Immunization Cooperative Agreements $582,215
97.047 Voluntary Home Buy-Out Program $284,839
16.588 Stop Violence Against Women Formula Grants $173,146
16.752 Economic, High-Tech, and Cyber Crime Prevention $79,117
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $69,028
20.205 Highway Planning and Construction $62,471
21.016 Equitable Sharing - Sheriff Federal Dea $58,463
10.553 School Breakfast Program $55,967
93.116 Health Tb Elimination $46,779
97.042 Emergency Management Performance Grants $46,432
93.069 Public Health Emergency Preparedness $38,900
16.050 Domestic Violence Grant $37,803
11.300 Investments for Public Works and Economic Development Facilities $35,070
16.575 Crime Victim Assistance $32,565
21.027 Coronavirus State and Local Fiscal Recovery Funds $27,475
20.513 Pm Transportation Mobility Grant $21,562
93.354 Cooperative Agreement for Emergency Response: Public Health Crisis Response $18,148
10.555 National School Lunch Program $7,450
97.067 Homeland Security Grant Program $3,882