TOWN OF CLARKSVILLE

FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): IN0086 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the Town to ensure compliance with requirements related to the grant agreement and the Period of Performance compliance requirement. Recipients must liquidate all obligations incurred by December 31, 2024, under the award no later than December 31, 2026, which is the end of the period of performance. As such, program obligations or costs must be incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. No new obligations or costs may be incurred during the period beginning January 1, 2025, and ending on December 31, 2026. During this two-year period from January 1, 2025 through December 31, 2026, recipients are only permitted to expend funds to satisfy obligations incurred by December 31, 2024. An "obligation" includes an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment. A recipient is also considered to have incurred an obligation by December 31, 2024, with respect to a requirement under federal law or regulation or a provision of the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award terms and conditions to which the recipient becomes subject as a result of receiving or expending SLFRF funds. INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Subsequent to December 31, 2024, the Town entered into three contracts on March 6, March 26, and November 26, 2025, respectively. During the audit period, the Town incurred and paid expenses totaling $1,072,479 related to these agreements. We consider $1,072,479 to be questioned costs. 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 35.5(a) states: "In general. A recipient may only use funds for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable. A recipient may only use funds for the purposes enumerated in § 35.6 (g) through (h) to cover costs incurred during the period beginning December 29, 2022, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2), 602(c)(5)(C), 603(c)(2), and 603(c)(6)(B) of the Social Security Act, as applicable." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. . . ." 31 CFR 35.3 states in part: ". . . Obligation means an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment. . . ." Cause The Town's management failed to properly design and implement an internal control system that would have ensured the Period of Performance compliance requirement was adhered to during the audit period. No new obligations or costs were to be incurred during the period beginning January 1, 2025, and ending on December 31, 2026. The Town entered into three contracts, incurred and paid expenses from the program related to these contracts that were awarded subsequent to December 31, 2024. Effect The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Period of Performance compliance requirement could have resulted in the loss of federal funds to the Town. INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs Questioned costs in the amount of $1,072,479 were identified as noted in the Condition and Context. Recommendation We recommended that the Town's management establish an effective system of internal controls and to ensure compliance with the grant agreement and the Period of Performance 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 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 72270 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The Town's Fire Department (Fire Department) was awarded the Health Issues and Challenges Grant through the Indiana Department of Health (IDOH), financed through the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The grant was funded through the American Rescue Plan Act that focused on community paramedicine. Metrics and Evaluation of Funded Activities Report The Fire Department was required to submit program specific metrics and funded activities report to the IDOH through the RedCap software on a monthly basis, due 15 days after month end. The Fire Department Office Manager (Office Manager) was responsible for tracking and compiling the necessary information for the monthly reports. Of the 12 reports tested, two reports were submitted 41 and 12 days late. In addition, the monthly reports were submitted by the Office Manager via the RedCap software without a documented oversight, review, or approval process to ensure timely submission. Annual Report on Program Activities The Fire Department was required to submit an annual report on program activities to the IDOH through an infographic report. The Office Manager was responsible for tracking and compiling the necessary information for the annual report on program activities. The annual report on program activities was submitted by the Office Manager, without a documented oversight, review, or approval process to ensure timely submission. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 200.329(c)(1) states in part: "The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. . . ." Cause The issues with the monthly Metrics and Evaluation of Funded Activities Reports and the Annual Report on program activities reporting processes stem from the lack of a formal oversight and review procedure to ensure accuracy and timeliness. Without a structured verification process before submission, potential errors and inconsistencies could go undetected, thus increasing the likelihood of inaccurate data reporting. Additionally, the reliance on individual staff members to compile and submit reports without secondary review created inefficiencies and contributed to delays, as evidenced by the late submission of two monthly reports. Effect The lack of oversight and review of the metrics and evaluation of funded activities reports and the annual report on program activities reporting process could result in increased risk of inaccurate data being reported to the IDOH, which could compromise the integrity of the program's performance metrics. The absence of a structed verification process can also lead to inefficiencies, as error or inconsistencies may have required corrections after submission, resulting in inefficient use of time and resources. Additionally, the late submission of two monthly reports indicated a failure to meet reporting deadlines, which could negatively impact compliance with grant requirements and potentially jeopardize future funding opportunities. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the Fire Department implement a formal oversight and review process for all data submissions to ensure accuracy and completeness before they are submitted to the IDOH. This would involve a secondary review by a designated individual or team to verify the data. Additionally, improving workflow coordination through clearly defined roles and responsibilities for each team member would help streamline the process and prevent delays. To further improve timeliness, the Fire Department should implement a tracking and reminder system for report due dates to ensure timely submissions. Providing staff with thorough training on reporting protocols and maintaining detailed documentation will help ensure consistent adherence to procedures. Finally, establishing accountability measures through clear roles, deadlines, and regular audits would enhance the efficiency and effectiveness of the reporting process. These steps will help ensure the Fire Department meets grant requirements, maintains data accuracy, and avoids potential delays or issues in future submissions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2023-001 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): IN0086, 220410, 72270 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF), 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 Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The Town did not have any policies or procedures in place related to the suspension and debarment requirements. A population of four covered transactions, totaling $2,359,400, that equaled or exceeded $25,000 paid from SLFRF funds were identified. All four covered transactions were selected for testing. For each of the four transactions, the Town did not verify the vendors' suspension or debarment status prior to payment due to the Town not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. 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 intend to 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 The Town's purchasing policy does not include procedures to verify the suspension and debarment status of vendors or subrecipients with whom the Town is entering into a covered transaction. In addition, the Town was not aware of the suspension and debarment requirements at the time the covered transactions were entered into. INDIANA STATE BOARD OF ACCOUNTS 14 TOWN OF CLARKSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The Town cannot ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the Town used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. 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 Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town design and implement a system of internal controls to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into contracts. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-002 Subject: Highway Planning and Construction Cluster - Internal Controls Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Numbers and Years (or Other Identifying Numbers): DES NO 1700724, DES NO 1801597, DES NO 1700725 Pass-Through Entity: Indiana Department of Transportation Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context The Town 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, or detecting and correcting, material noncompliance related to expenditures made from the Highway Planning and Construction funds. The Indiana Department of Transportation (INDOT) administers the Highway Planning and construction program in the State of Indiana. The INDOT passes federal funds through to the Local Public Agencies (LPA) for qualifying projects to construct, preserve, and improve transportation on the nation's roads. When a project is awarded, the contract outlines specific requirements with which the LPA is required to comply. When the LPA signs the contract, they accept their responsibility for ensuring each local federal-aid project complies with all federal laws and regulations. The LPA is also required to appoint at least one full-time employee as the Employee in Responsible Charge (ERC) to manage the award. In order to receive reimbursement, the LPA is required to submit an LPA Invoice Voucher with supporting documentation. Invoices are to be reviewed for accuracy, and approved by the ERC, before payment by the LPA. Proof of the ERC review must be provided when requesting reimbursement on the LPA Invoice Voucher. Given INDOTs thorough review process for ensuring expenses are allowable, our objective was to verify invoices were not charged to any other federal programs and that invoices sent to the INDOT were not fraudulent. The Capital Projects Manager/ERC prepared and submitted the LPA Invoice Vouchers without a review or oversight process in place to ensure that the expenses were not charged to any other federal programs and were not fraudulent. The lack of internal controls was a systematic issue 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). . . ." Cause A proper system of internal controls over the Highway Planning and Construction expenditures was not designed by management of the Town, which would include segregation of key functions to ensure Highway Planning and Construction funds were not fraudulent or charged to other federal programs. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management perspective 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 County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town design and implement a proper system of internal controls that would provide segregation of duties for the preparation of the LPA Invoice Voucher and the review of the LPA Invoice Voucher prior to submission to the INDOT. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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