Finding Text
FINDING 2023-010
Information on the federal program:
Federal Agency: Department of the Treasury
Pass-Through Entity: The Indianapolis Foundation and The City of Indianapolis
Federal Program: Coronavirus State and Fiscal Recovery Funds
Assistance Listing Number: 21.027
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Significant Deficiency, Internal Controls
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 200.318(i) states:
"The non-Federal entity must maintain records sufficient to detail the history of 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."
2 CFR 200.320(b) states:
"Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources."
2 CFR 180.300 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 intend to do business is not excluded or disqualified.
You do this by:
(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."
Condition: For one selected procurement, EmployIndy was unable to provide support indicating review of procurement documents.
Cause: A proper system of internal controls was not implemented by management of the Organization, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Organization’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, including policies and procedures that provide segregation of duties and additional oversight as needed, 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 organization.
Questioned costs: There are no questioned costs.
Context: Management was unable to provide adequate support indicating preparation and review of procurement and suspension and debarment documents for the Plaid Agency. Crowe was only able to view the bid request and bid. Documents indicating rationale for awarding the contract were not provided.
Identification as a repeat finding, if applicable: This is not a repeat finding.
Recommendation: We recommend that management establish a proper system of internal control and develop policies and procedures to ensure all required documentation is retained and provided for purchases and to ensure contractors and subrecipients, as appropriate are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards.
Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.