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STATE BOARD OF ACCOUNTS 302 West Washington Street Room E418 INDIANAPOLIS, INDIANA 46204-2769 FEDERAL SINGLE AUDIT REPORT OF ALLEN COUNTY, INDIANA January 1, 2017 to December 31, 2017 B50902 FILED 09/27/2018 ---PAGE BREAK--- ---PAGE BREAK--- TABLE OF CONTENTS Description Page Schedule of Officials 2 Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance With Government Auditing Standards 3-4 Independent Auditor's Report on Compliance for Each Major Federal Program; Report on Internal Control over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 5-7 Schedule of Expenditures of Federal Awards and Accompanying Notes: Schedule of Expenditures of Federal Awards 10-11 Notes to Schedule of Expenditures of Federal Awards 12 Schedule of Findings and Questioned Costs 13-17 Auditee-Prepared Documents: Summary Schedule of Prior Audit Findings 20-25 Corrective Action Plan 26-27 Other Reports 28 ---PAGE BREAK--- SCHEDULE OF OFFICIALS Office Official Term County Auditor Tera K. Klutz 01-01-15 to 01-18-17 Nicholas D. Jordan 01-19-17 to 12-31-18 County Treasurer William F. Royce 01-01-17 to 12-31-20 Clerk of the Circuit Court Lisbeth A. Borgmann 01-01-15 to 12-31-18 County Sheriff David J. Gladieux 01-01-15 to 12-31-18 County Recorder Anita A. Mather 01-01-15 to 12-31-18 Circuit Court Judge Honorable Thomas J. Felts 01-01-15 to 12-31-20 Superior Court Judge Honorable Daniel G. Heath 01-01-15 to 01-31-20 President of the Board of County Commissioners Therese M. Brown 01-01-17 to 12-31-18 President of the County Council Larry L. Brown 01-01-17 to 12-31-17 Joel M. Benz 01-01-18 to 12-31-18 ---PAGE BREAK--- STATE OF INDIANA AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS 302 WEST WASHINGTON STREET ROOM E418 INDIANAPOLIS, INDIANA 46204-2769 Telephone: (317) 232-2513 Fax: (317) 232-4711 Web Site: www.in.gov/sboa INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS TO: THE OFFICIALS OF ALLEN COUNTY, INDIANA We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Allen County (County), as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the County's basic financial statements and have issued our report thereon dated August 28, 2018. The opinion on the aggregate discretely presented component units was qualified because two discretely presented component units were not properly included in the County's financial statements. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the County's internal control over financial reporting (internal control) to determine the audit procedures that are appro- priate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County's internal control. Accordingly, we do not express an opinion on the effectiveness of the County's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. ---PAGE BREAK--- INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Continued) Compliance and Other Matters As part of obtaining reasonable assurance about whether the County's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the County's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Paul D. Joyce, CPA State Examiner August 28, 2018 ---PAGE BREAK--- STATE OF INDIANA AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS 302 WEST WASHINGTON STREET ROOM E418 INDIANAPOLIS, INDIANA 46204-2769 Telephone: (317) 232-2513 Fax: (317) 232-4711 Web Site: www.in.gov/sboa INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE TO: THE OFFICIALS OF ALLEN COUNTY, INDIANA Report on Compliance for Each Major Federal Program We have audited Allen County's (County) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2017. The County's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with Federal statutes, regulations, and the terms and conditions of its Federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the County's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the County's compliance. Basis for Qualified Opinion on Equitable Sharing Program As described in items 2017-001 and 2017-002 in the accompanying Schedule of Findings and Questioned Costs, the County did not comply with requirements regarding Suspension and Debarment and Special Test and Provisions - Wage Rate Requirements that are applicable to its Equitable Sharing Program. Compliance with such requirements is necessary, in our opinion, for the County to comply with requirements applicable to that program. ---PAGE BREAK--- INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE (Continued) Qualified Opinion on Equitable Sharing Program In our opinion, except for the noncompliance described in the Basis for Qualified Opinion on Equitable Sharing Program paragraph, the County complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on the Equitable Sharing Program for the year ended December 31, 2017. Unmodified Opinion on the Other Major Federal Programs In our opinion, the County complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its other major federal program identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs for the year ended December 31, 2017. Report on Internal Control over Compliance Management of the County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the County's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effec- tiveness of the County's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a de- ficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over com- pliance that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified certain deficiencies in internal control over compliance, as described in the accompanying Schedule of Findings and Questioned Costs as items 2017-001 and 2017-002, that we consider to be material weaknesses. The County's response to the internal control over compliance findings identified in our audit is described in the accompanying Corrective Action Plan. The County's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. ---PAGE BREAK--- INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE (Continued) The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of County, as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise County's basic financial statements. We issued our report thereon dated August 28, 2018, which contained unmodified opinions on those financial statements except for the aggregate discretely presented component units, for which the opinion was qualified. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Paul D. Joyce, CPA State Examiner August 28, 2018 ---PAGE BREAK--- (This page intentionally left blank.) ---PAGE BREAK--- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND ACCOMPANYING NOTES The Schedule of Expenditures of Federal Awards and accompanying notes presented were prepared by management of the County. The schedule and notes are presented as intended by the County. ---PAGE BREAK--- Pass-Through Federal Entity (or Other) Total Federal Grantor Agency CFDA Identifying Pass-Through Federal Awards Cluster Title/Program Title/Project Title Pass-Through Entity or Direct Grant Number Number To Subrecipient Expended Department of Agriculture Child Nutrition Cluster School Breakfast Program Indiana Department of Education 10.553 School Breakfast FY 2017 - $ 47,505 $ National School Lunch Program 10.555 School Lunch FY 2017 - 74,458 School Snack FY 2017 - 15,375 Commodities FY 2017 - 12,023 Total - Child Nutrition Cluster - 149,361 Total - Department of Agriculture - 149,361 Department of Justice Equitable Sharing Program Direct Grant 16.922 Asset Seizure - Sheriff FY 2017 10,000 542,099 Asset Seizure - Prosecutor FY 2017 - 8,317 Total - Equitable Sharing Program 10,000 550,416 Crime Victim Assistance Indiana Criminal Justice Institute 16.575 Victims of Crime D3-17-11386 - 50,233 Violence Against Women Formula Grants Indiana Criminal Justice Institute 16.588 Domestic Violence D3-17-11331 - 25,587 Edward Byrne Memorial Justice Assistance Grant Program 16.738 JAG Program Indiana Criminal Justice Institute D3-17-11647 - 19,884 JAG in car video equipment City of Fort Wayne 2016-DJ-BX-0806 - 60,190 Total - Edward Byrne Memorial Justice Assistance Grant Program - 80,074 Total - Department of Justice - 706,310 Department of Transportation Highway Planning and Construction Cluster Highway Planning and Construction Indiana Department of Transportation 20.205 NIRCC 17805329 FY 2017 - 690,722 NIRCC 17802816 FY 2017 - 31,970 NIRCC 17802586 FY 2017 - 1,125 NIRCC 17816850 FY 2017 - 13,375 NIRCC 18801291 FY 2017 - 112,119 NIRCC 18803423 FY 2017 - 29,737 Preliminary Engineering Des. 400582 - 52,969 Construction Engineering Des. 400583 - 984 Construction Engineering Des. 400584 - 348,270 Preliminary Engineering Des. 400584 - 11,411 Project final close out Des. 400586 - 4,970 Construction Engineering Des. 710075 - 64 Construction Engineering Des. 710077 - 46 Final Project close out Des. 9902042 - 86,334 Preliminary Engineering Des. 1297238 - 9,759 Right of Way Des. 1297238 - 165,040 Construction Engineering Des. 1297238 - 2,538 Preliminary Engineering Des. 1382100 - 67,147 Right of Way Des. 1382492 - 425,506 Construction Engineering Des. 1382493 - 302,982 Preliminary Engineering Des. 1382497 - 41,822 Right of Way Des. 1382497 - 50,982 Preliminary Engineering Des. 1382818 - 64,490 Right of Way Des. 1382818 - 24,773 Final Project close out Des. 1383241 - 600,000 Total - Highway Planning and Construction Cluster - 3,139,135 ALLEN COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2017 -10- ---PAGE BREAK--- Pass-Through Federal Entity (or Other) Total Federal Grantor Agency CFDA Identifying Pass-Through Federal Awards Cluster Title/Program Title/Project Title Pass-Through Entity or Direct Grant Number Number To Subrecipient Expended ALLEN COUNTY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2017 Highway Safety Cluster City of Fort Wayne 20.600 State and Community Highway Safety D3-18-11876 - 7,013 Alcohol Impaired Driving Countermeasures Incentive Grants I 20.601 D3-17-11165 - 15,254 D3-18-12042 - 7,228 Total - Alcohol Impaired Driving Countermeasures Incentive Grants I - 22,482 Total Highway Safety Cluster - 29,495 Total - Department of Transportation - 3,168,630 Environmental Protection Agency State Indoor Radon Grants Indiana State Department of Health 66.032 A70-5-154012 - 3,000 Total - Environmental Protection Agency - 3,000 Department of Health and Human Services Immunization Cooperative Agreements Indiana State Department of Health 93.268 A70-5-073158 - 9,171 PPHF Capacity Building Assistance to Strengthen Public Health Immunization Infrastructure and Performance financed in part by Prevention and Public Health Funds Indiana State Department of Health 93.539 H23IP000723 - 107,502 Child Support Enforcement Indiana Department of Child Services 93.563 Child Support Enforcement FY 2017 - 2,585,039 Refugee and Entrant Assistance Targeted Assistance Grants Indiana Family and Social Services Administration 93.566 Refugee Health Screens A70-5-106111 - 10,801 Refugee Health Screens PO 18528589 - 2,147 Total Refugee and Entrant Assistance Targeted Assistance Grants - 12,948 State Court Improvement Program Indiana Supreme Court 93.586 Court Improvement CIP-2016BD - 12,220 HIV Prevention Activities_Health Department Based Indiana State Department of Health 93.940 HIV/AIDS Program PO 16535787 - 29,580 Syringe Service Program PO 17548676 - 17,461 Total - HIV Prevention Activities_Health Department Based - 47,041 Total - Department of Health and Human Services - 2,773,921 Department of Homeland Security Emergency Management Performance Grants Indiana Department of Homeland Security 97.042 Emergency Management Salary EMC-2016-EP-00006-S01 - 101,077 Total - Department of Homeland Security - 101,077 Total federal awards expended 10,000 $ 6,902,299 $ The accompanying notes are an integral part of the Schedule of Expenditures of Federal Awards. -11- ---PAGE BREAK--- ALLEN COUNTY NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Note 1. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal grant activity of the County under programs of the federal government for the year ended December 31, 2017. The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Because the SEFA presents only a select portion of the operations of the County, it is not intended to and does not present the financial position of the County. Note 2. Summary of Significant Accounting Policies Expenditures reported on the SEFA are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowed or are limited as to reimbursement. When federal grants are received on a reimbursement basis, the federal awards are considered expended when the reimbursement is received. The County has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. -12- ---PAGE BREAK--- ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS Section I - Summary of Auditor's Results Financial Statements: Type of auditor's report issued: Unmodified for all opinion units except the aggregate discretely presented component units, which was qualified Internal control over financial reporting: Material weaknesses identified? no Significant deficiencies identified? none reported Noncompliance material to financial statements noted? no Federal Awards: Internal control over major programs: Material weaknesses identified? yes Significant deficiencies identified? none reported Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? yes Identification of Major Programs and type of auditor's report issued on compliance for each: CFDA Number Name of Federal Program or Cluster Opinion Issued 16.922 Equitable Sharing Program Qualified 93.563 Child Support Enforcement Unmodified Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee? no Section II - Financial Statement Findings No matters are reportable. Section III - Federal Award Findings and Questioned Costs FINDING 2017-001 Subject: Equitable Sharing Program - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Justice Federal Program: Equitable Sharing Program CFDA Number: 16.922 Federal Award Number and Year (or Other Identifying Number): FY 2017 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion -13- ---PAGE BREAK--- ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat of Finding 2016-003 from the immediately prior audit. Condition An effective internal control system was not in place at the County in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. On August 5, 2016, the County contracted with a construction company to construct a training facility for the County Sheriff's Department. The construction of the training facility was funded through Equitable Sharing Program funds. The contract continued through March 2017. The County did not request or receive certified payrolls from the construction company to determine if prevailing wages were being properly paid. Context No certified payrolls from the construction company were received for any of the weeks during which construction was performed. The lack of controls and noncompliance related to the Special Tests and Provisions - Wage Rate Requirements compliance requirement were systemic issues. Criteria 2 CFR 200.326 states: "The non-Federal entity's contract must contain the applicable provisions described in Appendix II to Part 200-Contract Provisions for non-Federal Entity Contracts Under Federal Awards." 2 CFR Appendix II to Part 200(D) states in part: "Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141- 3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. . . 29 CFR 5.5(a)(3)(ii)(A) states in part: "The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR . . -14- ---PAGE BREAK--- ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR section 200.303 states in part: "The non-Federal entity must: 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 and the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . Cause Management had not developed a system of internal controls relating to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish internal controls enabled material noncompliance to go undetected, which could have resulted in a loss of federal funds to the County. Questioned costs There were no questioned costs identified. Recommendation We recommended that the County's management establish controls, including segregation of duties, to ensure compliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. FINDING 2017-002 Subject: Equitable Sharing Program - Suspension and Debarment Federal Agency: Department of Justice Federal Program: Equitable Sharing Program CFDA Number: 16.922 Federal Award Number and Year (or Other Identifying Number): FY 2017 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat of Finding 2016-002 from the immediately prior audit. -15- ---PAGE BREAK--- ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition An effective internal control system was not in place at the County in order to ensure compliance with requirements related to the grant agreement and the Suspension and Debarment compliance require- ment. On April 18, 2017, the County contracted for modular container units for the Training Facility for the County Sheriff's Department. The County did not verify that the vendor was not suspended or debarred. Context The lack of controls and noncompliance related to the Suspension and Debarment compliance requirement were systemic issues during the audit period. Criteria 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: Checking SAM Exclusions; or Collecting a certification from that person; or Adding a clause or condition to the covered transaction with that person." 2 CFR 200.303 states in part: "The non-Federal entity must: 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 and the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . Cause Management had not developed a system of internal controls relating to the grant agreement and the Suspension and Debarment compliance requirement. Effect The failure to establish internal controls enabled material noncompliance to go undetected, which could have resulted in a loss of federal funds to the County. -16- ---PAGE BREAK--- ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management establish controls, including segregation of duties, to ensure compliance with the grant agreement and the Suspension and Debarment compliance requirement. View of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. -17- ---PAGE BREAK--- (This page intentionally left blank.) -18- ---PAGE BREAK--- AUDITEE-PREPARED DOCUMENTS The subsequent documents were provided by management of the County. The documents are presented as intended by the County. -19- ---PAGE BREAK--- Allen County Sheriff's Department David J. Gladieux Sheriff SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FINDING 2016-001 Equitable Sharing Program - Reporting Fiscal year in which the finding initially occurred: 2016 Direct Grant - Department of Justice Contact Person Responsible for Corrective Action: Angela Terry Contact Phone Number: [PHONE REDACTED] Status of Audit Finding: This Department has been in contact with the Department of Justice since the end of the FY2016 Audit and has revised previous certification forms in order to correct errors made in reporting initial balances. Corrective action is still ongoing as we are in the process of finalizing these corrections. Contact was made by Angela Terry to Jackie Scheuman in the Allen County Auditor's Office to confirm the correct beginning and ending balances. Presently, certification for FY 2017 has not been completed, as the Department of Justice has asked this department not to file anything until previous issues are resolved. Currently this agency is not in compliance with the Equitable Sharing program. Written policy was established for this department and is attached. FINDING 2016-002 Equitable Sharing Program - Procurement and Suspension and Debarment Fiscal year in which the finding initially occurred: 2016 Direct Grant - Department of Justice Contact Person Responsible for Corrective Action: Angela Terry Contact Phone Number: [PHONE REDACTED] Status of Audit Finding: After reviewing findings with Ms. Ross, this department acknowledges that the required procedures were not followed before administering capital improvements to the Department's training facility according to the Equitable Sharing Guide issued by the Department of Justice. This oversight was brought to the attention of the Department during the State Board of Accounts FY 2016 Audit, and at that time, Angela Terry contacted the Department of Justice to request approval for the training center expansion. Approval was given. This action has been corrected and implemented for a planned Law Enforcement K9 Facility. This was corrected August 15, 2017. Future Capital Improvement Requests will be submitted prior to Department commitment to purchase, lease, construct, or expand law enforcement or detention facilities. t ? was established for this department and is attached. David J. Glad· Sheriff July 2, 2018 715 SOUTH CALHOUN STREET, ROOM 101 COURTHOUSE, FORT WAYNE, IN 46802-1805 OFFICE: [PHONE REDACTED] • FAX: [PHONE REDACTED] • COMMUNICATION: [PHONE REDACTED] • TDD: [PHONE REDACTED] "An Equal Opportunity Employer" -20- ---PAGE BREAK--- -21- ---PAGE BREAK--- -22- ---PAGE BREAK--- -23- ---PAGE BREAK--- ALLEN COUNTY DEPARTMENT OF PUBLIC PURCHASE Dawn Rose, Director Citizens Square 200 E. Berry St., Suite 495 Fort Wayne, IN 46802 Phone: (260)449-7567 Fax: (260)449-8978 www.co.allen.in.us/purchasing SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Finding 2016-002 Fiscal year in which the finding initially occurred: 2016 Direct Grant from the Department of Justice Contact person responsible for corrective action: Dawn Rose Contact phone number: [PHONE REDACTED] Status of Audit Finding: Since the audit of 2016, the purchasing department has not been involved in a construction project equal to or exceeding $25,000 and funded through the Equitable Sharing Program in 2017. The Board of Commissioners of the County of Allen now has a process in place that insures that prior to awarding a construction project we have determined the contractor has not been debarred or suspended therefor ensuring compliance with requirements related to the grant agreement and the Procurement, Suspension, and Debarment requirements. After bid opening the purchasing department administrative assistant will search SAM to confirm whether or not the contactor has any Active Exclusion Records. The purchasing director and administrative assistant will, by signature affirm the process has been followed. (Signature) (Title) (Date) -24- Purchasing Director 07/26/2018 ---PAGE BREAK--- ALLEN COUNTY DEPARTMENT OF PUBLIC PURCHASE Dawn Rose, Director Citizens Square 200 E. Berry St., Suite 495 Fort Wayne, IN 46802 Phone: (260)449-7567 Fax: (260)449-8978 www.co.allen.in.us/purchasing SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Finding 2016-003 Fiscal year in which the finding initially occurred: 2016 Direct Grant from the Department of Justice Contact person responsible for corrective action: Dawn Rose Contact phone number: [PHONE REDACTED] Status of Audit Finding: Since the audit of 2016, the purchasing department has not been involved in a construction project equal to or exceeding $25,000 and funded through the Equitable Sharing Program in 2017. The Board of Commissioners of the County of Allen now has a process in place for implementation, review and document control relating to the Davis Bacon Act. Once it has been determined that a construction project equal to or exceeding $25,000 is being funded through the Equitable Sharing Program, the sheriff’s department will contract with NIRCC who will perform all duties required under the Davis Bacon Act including but not limited to auditing weekly certified payroll records as well as verification procedures in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions- Wage Rate Requirements. (Signature) (Title) (Date) -25- Purchasing Director 7/26/2018 ---PAGE BREAK--- ALLEN COUNTY DEPARTMENT OF PUBLIC PURCHASE Dawn Rose, Director Citizens Square 200 E. Berry St., Suite 495 Fort Wayne, IN 46802 Phone: (260)449-7567 Fax: (260)449-8978 www.co.allen.in.us/purchasing Corrective Action Plan Finding 2017-001 July 25, 2018 Contact person responsible for the corrective action: Dawn Rose Contact Phone Number: [PHONE REDACTED] Views of Responsible Official: Allen County Department of Public Purchase concurs with the finding and proposes this corrective action plan. Subject: Equitable Sharing Program – Compliance with Special Tests and Provisions – Wage Rate Requirements Description of Corrective Action Plan: The Board of Commissioners of the County of Allen will create a procedure for implementation, review and document control for the Davis-Bacon Act; related to certified payroll review and verification procedures. This procedure will identify the roles of the individuals responsible for completing the tasks. Anticipated Completion Date: It is anticipated that the creation and implementation of this procedure will require several meetings in order to involve legal counsel for Allen County Sheriff’s Department, the sheriff’s internal staff designee responsible for compliance of the Equitable Sharing Program, Allen County’s attorney, Allen County purchasing director, a NIRCC representative and the Board of Commissioners’ legal liaison. The target date will be January 2, 2018. -26- ---PAGE BREAK--- ALLEN COUNTY DEPARTMENT OF PUBLIC PURCHASE Dawn Rose, Director Citizens Square 200 E. Berry St., Suite 495 Fort Wayne, IN 46802 Phone: (260)449-7567 Fax: (260)449-8978 www.co.allen.in.us/purchasing Corrective Action Plan July 25, 2018 Finding 2017-002 Contact person responsible for the corrective action: Dawn Rose Contact Phone Number: [PHONE REDACTED] Views of Responsible Official: Allen County Department of Public Purchase concurs with the finding and proposes this corrective action plan. Subject: Equitable Sharing Program – Suspension and Debarment Description of Corrective Action Plan: In order for the Board of Commissioners of the County of Allen to award a contract for a public works project expected to equal or exceed $25,000, and funded through the Equitable Sharing Program, a search of the System of Award Manager Center website will take place confirming Contractor is not excluded or disqualified per established requirements for Procurement, Suspension, and Debarment. Allen County Department of Public Purchase will be responsible for verification involving federally funded public works projects utilizing the Equitable Sharing Program funds. Specific verbiage will be added to bid specification documents informing bidders of this compliance requirement. Anticipated Completion Date: It is anticipated that the creation and implementation of this procedure will begin as soon as possible but no later than January 2, 2018. -27- ---PAGE BREAK--- OTHER REPORTS In addition to this report, other reports may have been issued for the County. All reports can be found on the Indiana State Board of Accounts' website: http://www.in.gov/sboa/. -28-