Finding Text
FINDING 2023-003
Subject: Emergency Connectivity Fund Program - Suspension and Debarment
Federal Agency: Federal Communications Commission
Federal Program: Emergency Connectivity Fund Program
Assistance Listings Number: 32.009
Federal Award Numbers and Years (or Other Identifying Numbers): FY 2022, FY 2023
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Prior to entering into subawards and covered transactions with federal award funds, recipients are
required to verify that such 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 (i.e., grant agreement) that are expected to equal or exceed $25,000.
The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor,
or adding a clause or condition to the covered transaction with that vendor.
Upon inquiry of the School Corporation in order to review the procedures in place for verifying that
a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise
excluded, the School Corporation disclosed there were not any documented internal controls. Three
covered transactions with two vendors that equaled or exceeded $25,000 were identified. The covered
transactions, totaling $735,400, were selected for testing. For the two vendors, the School Corporation did
not verify the vendor's suspension and debarment status prior to payment.
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). . . ."
2 CFR 180.300 states:
"When you enter into a covered transaction with another person as 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:
INDIANA STATE BOARD OF ACCOUNTS
23
LAFAYETTE SCHOOL CORPORATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(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."
47 CFR 54.8(d) states in part: "Effect of suspension and debarment. Unless otherwise ordered,
any persons suspended or debarred shall be excluded from activities associated with or related to the
schools and libraries support mechanism . . ."
Cause
A proper system of internal controls was not designed by management of the School Corporation.
Embedded within a properly designed and implemented internal control system should be internal controls
consisting of policies and procedures. Policies reflect the School Corporation'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. As a result, vendors to whom payments were equal to or in excess of $25,000 were not
verified to be not suspended, debarred, or otherwise excluded.
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 School Corporation.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the School Corporation establish a system of internal
controls and develop policies and procedures to ensure that contractors and subrecipients, as appropriate,
are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.