Wayne TownshipLocal Government

FINDING 2024-002 Subject: Medicaid Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): 100288480A Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context The Township 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 Medicaid Cluster. The Medicaid Cluster consists of three federal programs. However, the Township received funding from only one program, the Medical Assistance Program. The Medical Assistance Program grant funding is provided by the Indiana Family and Social Services Administration to Freestanding Governmental Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal ambulance payment adjustment, the amount received by the Township. The Township utilized its Fire Fighting Fund to account for both fire and ambulance services. Costs were allocated between fire and ambulance services as necessary. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. The funding received during the audit period was based on expenditures and data from January 1, 2021 through December 31, 2021, and, as such, internal controls for that period were reviewed. The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm using information provided by the Township. The Township provided expenditure data, reports detailing run data, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared and submitted the report. The Township did not participate in the preparation or submission process, nor complete a review of the report prior to submission. As such, the Township could not ensure that the information provided was properly utilized or that the report was accurate. The lack of internal controls was a systemic 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). . . ." The Indiana State Board of Accounts (SBOA) is required under Indiana Code 5-11-1-27(e) to define the acceptable minimum level of internal control standards. To provide clarifying guidance, the State Examiner compiled the standards contained in the manual, Uniform Internal Control Standards for Indiana Political Subdivisions. All political subdivisions subject to audit by SBOA are expected to adhere to these standards. The standards include adequate control activities. According to this manual: "Control activities are the actions and tools established through policies and procedures that help to detect, prevent, or reduce the identified risks that interfere with the achievement of objectives. Detection activities are designed to identify unfavorable events in a timely manner whereas prevention activities are designed to deter the occurrence of an unfavorable event. Examples of these activities include reconciliations, authorizations, approval processes, performance reviews, and verification processes. An integral part of the control activity component is segregation of duties. . . . There is an expectation of segregation of duties. If compensating controls are necessary, documentation should exist to identify both the areas where segregation of duties are not feasible or practical and the compensating controls implemented to mitigate the risk. . . ." Cause A proper system of internal controls over the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Reporting compliance requirements for the Medicaid Cluster expenditures was not designed by management of the Township, which would include segregation of key functions to ensure Medicaid Cluster funds were being used appropriately. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Township's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Township first became aware of this internal control deficiency during the 2022 audit; however, since the expenditure reimbursements by the awarding agency are on a three-year cycle, the reimbursements received in 2024 were for submissions made for 2021 reporting. During 2021, the Township was unaware of the lack of internal controls. 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 Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Township's management design and implement a proper system of internal controls including policies and procedures that would include segregation of duties for the preparation and approval of expenditure reports to ensure the accuracy of such reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2023-003 Subject: Medicaid Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): FY 2023 Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Condition and Context The Township 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 Medicaid Cluster. INDIANA STATE BOARD OF ACCOUNTS 17 WAYNE TOWNSHIP, MARION COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Medicaid Cluster consists of three federal programs. However, the Township received funding from only one program, the Medicaid Assistance Program. The Medicaid Assistance Program grant funding is provided by the Indiana Family and Social Services Administration to Freestanding Governmental Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal ambulance payment adjustment, the amount received by the Township. The Township utilized its Fire Fighting Fund to account for both fire and ambulance services. Costs were allocated between fire and ambulance services as necessary. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. The funding received during the audit period was based on expenditures and data from January 1, 2020 through December 31, 2020, and as such, internal controls for that period were reviewed. The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm using information provided by the Township. The Township provided expenditure data, reports detailing run data, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared and submitted the report. The Township did not participate in the preparation or submission process, nor complete a review of the report prior to submission. As such, the Township could not ensure that the information provided was properly utilized or that the report was accurate. The lack of internal controls was a systemic 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). . . ." The Indiana State Board of Accounts (SBOA) is required under Indiana Code 5-11-1-27(e) to define the acceptable minimum level of internal control standards. To provide clarifying guidance, the State Examiner compiled the standards contained in the manual, Uniform Internal Control Standards for Indiana Political Subdivisions. All political subdivisions subject to audit by SBOA are expected to adhere to these standards. The standards include adequate control activities. According to this manual: "Control activities are the actions and tools established through policies and procedures that help to detect, prevent, or reduce the identified risks that interfere with the achievement of objectives. Detection activities are designed to identify unfavorable events in a timely manner whereas prevention activities are designed to deter the occurrence of an unfavorable event. Examples of these activities include reconciliations, authorizations, approval processes, performance reviews, and verification processes. An integral part of the control activity component is segregation of duties. . . . INDIANA STATE BOARD OF ACCOUNTS 18 WAYNE TOWNSHIP, MARION COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) There is an expectation of segregation of duties. If compensating controls are necessary, documentation should exist to identify both the areas where segregation of duties are not feasible or practical and the compensating controls implemented to mitigate the risk. . . ." Cause A proper system of internal controls over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting for the Medicaid Cluster expenditures was not designed by management of the Township, which would include segregation of key functions to ensure Medicaid Cluster funds were being used appropriately. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Township's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Township first became aware of this internal control deficiency during the 2022 audit; however, since the expenditure reimbursements by the awarding agency are on a threeyear cycle, the reimbursements received in 2023 were for submissions made for 2020 reporting. During 2020, the Township was unaware of the lack of internal controls. 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 Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Township's management design and implement a proper system of internal controls including policies and procedures that would include segregation of duties for the preparation and approval of expenditure reports to ensure the accuracy of such reports. 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: Medicaid Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): FY2022 Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context The Township 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 Medicaid Cluster. The Medicaid Cluster consists of three federal programs. However, the Township received funding from only one program, the Medicaid Assistance Program. The Medicaid Assistance Program grant funding is provided by the Indiana Family and Social Services Administration to Freestanding Governmental Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal ambulance payment adjustment, the amount received by the Township. The Township utilized its Fire Operations fund to account for both fire and ambulance services. Costs were allocated between fire and ambulance services as necessary. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. The funding received during the audit period was based on expenditures and data from January 1, 2019 through December 31, 2019, and as such, internal controls for that period were reviewed. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. As such, expenditures provided to the Township's CPA firm should have been reviewed for allowability prior to submission. No evidence of a review or oversight process to determine allowability was identified over the documentation submitted to the CPA firm. The lack of internal controls was a systemic 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 Medicaid Cluster expenditures was not designed by management of the Township, which would include segregation of key functions to ensure Medicaid Cluster funds were being used appropriately. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Township's management statements of what should be done to effect internal control, 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 Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Township design and implement a proper system of internal controls that would provide segregation of duties for the preparation of the claims for expenditures of the Medicaid Cluster awards and the review of these claims prior to payment. 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.

FINDING 2022-003 Subject: Medicaid Cluster - Reporting Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): FY2022 Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The Township 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 Medicaid Cluster. The Medicaid Cluster consists of three federal programs. However, the Township received funding from only one program, the Medicaid Assistance Program. The Medicaid Assistance Program grant funding is provided by the Indiana Family and Social Services Administration (FSSA) to Freestanding Governmental Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal ambulance payment adjustment, the amount received by the Township. The Township utilized its Fire Operations fund to account for both fire and ambulance services. Costs were allocated between fire and ambulance services as necessary. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. The funding received during the audit period was based on expenditures and data from January 1, 2019 to December 31, 2019, and as such, internal controls for that period were reviewed. The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm using information provided by the Township. The Township provided reports detailing run data, expenditures, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared the report and submitted it to the Indiana FSSA. The Township did not participate in the preparation or submission process, nor complete a review of the report prior to submission. As such, the Township could not ensure that the information provided was properly utilized or that the report was accurate. Additionally, for five of the seven key line items tested, the Township could not provide supporting documentation. The lack of supporting documentation for Ambulance Runs, Fire Runs, EMT Salaries, Fire Salaries, and Total Ambulance Cost on the 2019 Cost Report prevented the determination of the accuracy of these line items. 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 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. . . ." Cause A proper system of internal controls over the Medicaid Cluster expenditures was not designed by management of the Township, which would include segregation of key functions to ensure the Medicaid Cluster funds were appropriately reported. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Township'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 Township. In addition, not supporting key line items increases the likelihood that information is not accurate and properly reported to FSSA and the public. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Township design and implement a proper system of internal controls that would provide segregation of duties for the preparation of the Cost Report for Reimbursement for the Medicaid Cluster awards. 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.

FINDING 2021-003 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Period of Performance, Reporting Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2018-FH-00167 Pass-Through Entity: Direct Grant Compliance Requirements: Period of Performance, Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-005. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the Township to ensure compliance with requirements related to the grant agreement and the Period of Performance and Reporting compliance requirements. Period of Performance There was no review or approval of timesheets, spreadsheets, or employee time prior to being paid by the Executive Director to ensure expenses were within the period of performance. Reporting Reimbursement requests were prepared by the Deputy Fire Chief, without a documented oversight or review process to ensure accuracy. The lack of internal controls was a systemic 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 Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the Period of Performance and the Reporting compliance requirements. Effect The failure to establish an effective internal control system placed the Township at risk of noncompliance with the grant agreement and the compliance requirements listed above. A lack of segregation of duties within an internal control system could also allow noncompliance with the compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Township's management establish internal controls to ensure compliance with the grant agreement and the Period of Performance and the Reporting compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2021-004 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, and Matching Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2018-FH-00167 Pass-Through Entity: Direct Grant Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management; Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2020-006. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the Township to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, the Cash Management, and the Matching, Level of Effort, Earmarking compliance requirements. Activities Allowed or Unallowed and Allowable Costs/Cost Principles There was no review or approval of time sheets, spreadsheets, or employee time prior to payment by the Executive Director. Due to the lack of internal controls, employee salaries were overpaid, and overtime was inappropriately paid. The grant agreement/award letter listed each employee's salary as $47,151; however, the amount requested for reimbursement for each employee's salary was $47,751 (the union contract amount for probationary firefighters). The total amount of unallowable expenditures was $44,698. This amount was considered questioned costs. The grant agreement/award letter did not allow for the payment of overtime. However, overtime was paid and requested for reimbursement in the amount of $26,489. This amount was considered questioned costs. Additionally, the Township requested reimbursement for benefits at the budgeted amount, of $10,826 per employee, reimbursed at 75 percent, totaling $487,170 for the audit period. The actual costs paid, which should have been requested for reimbursement, was $266,090 for the audit period. The difference between the actual costs and the budgeted cost of $221,080 was considered questioned costs. Cash Management The Township did not always pay for expenditures prior to requesting reimbursement. The Township requested reimbursement for projected benefits instead of actual expenditures. Matching, Level of Effort, Earmarking There was no review or approval of the local match amount required by the grant. The Township did not provide the minimum amount or percentage of contributions required by the grant agreement. Total allowable program expenditures compared to total federal reimbursements resulted in a 11 percent local match, instead of the required 25 percent. 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 200.430(a) states: "General. Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits which are addressed in ? 200.431. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, when applicable." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.305(b)(3) states: "Reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per ? 200.208, or when the non-Federal entity requests payment by reimbursement. This method may be used on any Federal award for construction, or if the major portion of the construction project is accomplished through private market financing or Federal loans, and the Federal award constitutes a minor portion of the project. When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper." Cause Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, the Cash Management, and the Matching, Level of Effort, Earmarking compliance requirements. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the compliance requirements listed above could have resulted in the loss of federal funds to the Township. Questioned Costs Questioned costs totaled $292,267 as identified in the Condition and Context. Recommendation We recommended that the Township's management establish a system of internal control, including segregation of duties, to ensure compliance and comply with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, the Cash Management, and the Matching, Level of Effort, Earmarking compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-003 Subject: Medicaid Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): FY 2017 Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the Township to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. The Township had not designed or implemented a system of internal control over payments to vendors. Of the 60 vendor claims tested, 12 were for unallowable activities or select items of cost. These payments totaled $14,472 and were considered questioned costs. Additionally, the cost report utilized to request reimbursement totaled all costs for the Fire Fighting Fund. However, not all costs within the fund were allowable. 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 200.302(a) states in part: "Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and programspecific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . ." Per the federal award agreement: "The allowable activities under the Medicaid funding for the Township disallow any costs that is not directly related to the operation of the ambulance services for Medicaid patients." 45 CFR 75.403 states: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federallyfinanced and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also ? 75.306(b). (g) Be adequately documented. See also ?? 75.300 through 75.309." 45 CFR 75.404 states: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: Sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." 45 CFR 75.405(a) states: "A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart." Cause Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements could have resulted in the loss of federal funds to the Township. Questioned Costs Questioned costs identified were $14,472. Recommendation We recommended that the Township's management establish a system of internal control, including segregation of duties, to ensure compliance and comply with the grant agreement and the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-004 Subject: Medicaid Cluster - Matching, Reporting Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): FY 2017 Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting Audit Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the Township to ensure compliance with requirements related to the grant agreement and the Matching, Level of Effort, Earmarking, and the Reporting compliance requirements. The final cost report was prepared by an outside firm and reviewed for accuracy by a secondary firm. There were no identifiable controls at the local unit level. The required match for the grant was not tracked separately in the Township's records, but was calculated and added to the final cost report. There was no documented control over the amount noted as the match on the report. The lack of internal controls was a systemic 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 Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the Matching, Level of Effort, Earmarking and the Reporting compliance requirements. Effect The failure to establish an effective internal control system placed the Township at risk of noncompliance with the grant agreement and the compliance requirements listed above. A lack of segregation of duties within an internal control system could also allow noncompliance with the compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Township's management establish internal controls to ensure compliance and comply with the grant agreement and the Matching, Level of Effort, Earmarking, and the Reporting compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-005 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Period of Performance, Reporting Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2018-FH-00167 Pass-Through Entity: Direct Grant Compliance Requirements: Period of Performance, Reporting Audit Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the Township to ensure compliance with requirements related to the grant agreement and the Period of Performance and the Reporting compliance requirements. There was no review or approval of timesheets, spreadsheets, or employee time prior to being paid by the Executive Director to ensure expenses were within the period of performance. Reporting Reimbursement requests were prepared by the Deputy Fire Chief, without a documented oversight or review process to ensure accuracy. The lack of internal controls was a systemic 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 Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the Period of Performance and the Reporting compliance requirements. Effect The failure to establish an effective internal control system placed the Township at risk of noncompliance with the grant agreement and the compliance requirements listed above. A lack of segregation of duties within an internal control system could also allow noncompliance with the compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Township's management establish internal controls to ensure compliance and comply with the grant agreement and the Period of Performance and the Reporting compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2020-006 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, and Matching Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2018-FH-00167 Pass-Through Entity: Direct Grant Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the Township to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, the Cash Management, and the Matching, Level of Effort, Earmarking compliance requirements. Activities Allowed or Unallowed and Allowable Costs/Cost Principles There was no review or approval of time sheets, spreadsheets, or employee time prior to payment by the Executive Director. Due to the lack of internal controls, employee salaries were overpaid, and overtime was inappropriately paid. The grant agreement/award letter listed each employee's salary as $47,151; however, the amount requested for reimbursement for each employee's salary was $47,751 (the union contract amount for probationary firefighters). The total amount of unallowable expenditures was $11,839. This amount was considered questioned costs. The grant agreement/award letter did not allow for the payment of overtime. However, overtime was paid and requested for reimbursement in the amount of $20,224. This amount was considered questioned costs. Additionally, the Township requested reimbursement for benefits at the budgeted amount, of $10,826 per employee, reimbursed at 75 percent, totaling $243,585 for the audit period. The actual costs paid, which should have been the amount requested for reimbursement, was $144,225 for the audit period. The difference between the actual costs and budgeted costs of $99,360 was considered questioned costs. Cash Management The Township did not always pay for expenditures prior to requesting reimbursement. Matching, Level of Effort, Earmarking There was no review or approval of the local match amount required by the grant. The Township did not provide the minimum amount or percentage of contributions required by the grant agreement. Total allowable program expenditures compared to total federal reimbursements resulted in a 16 percent local match, instead of the required 25 percent. 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 200.430(a) states: "General. Compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Compensation for personal services may also include fringe benefits which are addressed in ? 200.431 Compensation - fringe benefits. Costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable." 2 CFR 200.305(b)(3) states in part: "Reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per ? 200.207 Specific conditions, or when the non-Federal entity requests payment by reimbursement. This method may be used on any Federal award for construction, or if the major portion of the construction project is accomplished through private market financing or Federal loans, and the Federal award constitutes a minor portion of the project. When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. . . ." Cause Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, the Cash Management, and the Matching, Level of Effort, Earmarking compliance requirements. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, the Cash Management, and the Matching, Level of Effort, Earmarking compliance requirements could have resulted in the loss of federal funds to the Township. Questioned Costs Questioned costs totaled $131,423 as identified in the Condition and Context. Recommendation We recommended that the Township's management establish a system of internal control, including segregation of duties, to ensure compliance and comply with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, the Cash Management, and the Matching, Level of Effort, Earmarking compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.