SUMNER COUNTY, KANSASLocal Government

Finding 2022-002: Allowable Costs and Activities Identification of the Federal Program: Federal Equitable Sharing Program, ALN 16.922 Criteria: For the Equitable Sharing Program, ALN 16.922, under Allowable Costs and Activities, the 2022 Compliance Supplement states that ?program policy and procedures are set forth in the Guide to Equitable Sharing for State, Local, and Tribal Law Enforcement Agencies (Guide) (July 2018) as well as Equitable Sharing Wires (Wires). In the Guide at Part V, Section B(2)(i) lists as an impermissible use, ?Shared funds may not be used to purchase equipment or other permissible items for other law enforcement agencies?. At Part V, Section B(2)(e) the Guide states, ?Shared funds may not be used to pay for food and beverages (alcoholic or nonalcoholic)?? Condition: Condition 1: During 2022, Sumner County made two separate purchases of equipment for two separate law enforcement agencies (both city police departments within Sumner County) totaling $14,179.04. The equipment was billed to and received by the two other agencies, but paid from the County Equitable Sharing Program funds. Condition 2: The County made semi-monthly purchases of bottled water from a vendor totaling $178.75 from the Equitable Sharing Program funds. Cause: Condition 1: The department head responsible for determining compliance with this provision (County Attorney) was aware of the provision in Part V, Section B(2)(i) above, but was of the opinion that the cost was allowable because he was also the chief law enforcement officer of those agencies, those agencies operate within the county?s jurisdiction and that the purchases of equipment for these two other agencies also benefited the county?s law enforcement agencies. Condition 2: The department head was not aware of the prohibition that the purchase of food and beverages from the Equitable Sharing funds would apply to bottled water. There is not a secondary review for allowability of the cost or activity. For both conditions, the approving department head?s knowledge of the compliance requirements was the internal control which failed. Effect or Potential Effect: Denial or extinguishment of sharing requests; temporary or permanent exclusion from the Program; freeze on receipt and/or expenditure of shared funds; return of funds or offsets from future sharing. Questioned Costs: Actual and projected costs are in the amount of the two conditions noted above and are below the $25,000 reporting level under the Uniform Guidance for questioned costs. Context: There were only two purchases of equipment for other law enforcement agencies in the population of 2022 expenditures, both noted above. There were 17 purchases of bottled water with each between $5.00 and $19.80 totaling $178.75 in the population of expenditures. Recommendation: The approving department head should review the compliance requirements, including updated guidance available in the Wires publication, when new or unusual purchases are considered. Views of the Responsible Officials: The County Attorney concurs with the findings. The County will reimburse the Equitable Sharing Fund for $14,357.79, the amount of the nonallowable costs, from other county funds in 2023.

Finding 2022-003: Equipment and Real Property Management Identification of the federal program: Federal Equitable Sharing, ALN 16.922 Criteria: Compliance Requirement F Equipment /Real Property Management in in Part 4 of the 2022 Compliance Supplement for this program states that, ?Although 2 CFR Sections 200.311 and 313 are not applicable, the Guide, Section VI, details requirements for tangible property. Property purchased with equitable sharing funds, or obtained for official use, is subject to inventory control, log maintenance, and disposal requirements.? The Guide states the local law enforcement agency must ?maintain and follow written policies for accounting, bookkeeping and inventory control?? The requirement for inventory control in 2 CFR 200.313 (d)((1) states procedures for managing equipment include, ?Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and the cost percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property.? Condition: The County maintains an inventory of equipment, however that inventory does not include the acquisition date, the source of funding, the cost percentage of Federal participation or federal award data. Disposed assets are deleted from the inventory and disposition data is not maintained. The inventory record is not complete enough to determine compliance with the Guide. Source documents supporting entries in the inventory record have not been retained. Cause: The county had an existing asset management software but developed its own inventory system exclusively using an Excel spreadsheet in 2022. The compliance requirements were not adequately considered when developing the spreadsheet and there was no effective internal control over its development and use. Effect: Denial or extinguishment of sharing requests; temporary or permanent exclusion from the Program; freeze on receipt and/or expenditure of shared funds; return of funds or offsets from future sharing. Questioned Costs: Not applicable Context: The inventory record does identify the equipment, its serial or other number and its location. Assets purchased using federal funds from other programs would also be subject to the same condition. Recommendation: The existing system should be modified be compliant with the Uniform Guidance requirements, or a specifically designed software should be used. Source documents supporting inventory records should be retained. Disposition data should be maintained. Views of Responsible Officials: Management concurs with this finding and recommendation.

Finding 2022-004: Procurement, Suspension and Debarment Identification of the federal program: Equitable Sharing Program, ALN 16.922 Criteria: Compliance Requirement I, Procurement, Suspension and Debarment, Part 4 of the 2022 Compliance Supplement states that, ?Although 2 CFR section 200.317-200.327 are not applicable, the Guide, Section VI.A.., requires agencies to follow their own jurisdiction?s procurement policies? and that Suspension and Debarment ? 2 CFR section 180.200-225 is applicable. In addition, the 2022 Compliance Supplement states that ?program policy and procedures are set forth in the Guide to Equitable Sharing for State, Local, and Tribal Law Enforcement Agencies (Guide) (July 2018) as well as Equitable Sharing Wires (Wires). The September 30, 2021 edition of the Wire (used to update the Guide) states that, ??local law enforcement agencies participating in the Department of Justice and Department of Treasury Equitable Sharing Program must verify that vendors are registered in the System for Award Management (SAM) and are in good standing. A vendor in good standing means the vendor is not suspended or debarred from receiving federal funds. This requirement applies to all qualifying purchases. A qualifying purchase is one single payment or multiple payments to a vendor that exceeds $25,000 annually.? Condition: Condition 1: The County purchased office furniture and equipment from a vendor totaling $64,518. Under the County?s purchasing policy, competitive bids were required; however, competitive bid documents were not present in the county?s paid bills files and there was no other documentation of competitive bids being solicited or received, or justification for not receiving bids, which the policy requires to be documented if bids cannot be obtained. Condition 2: The purchase noted in Condition 1, plus an additional purchase of $34,702 from another vendor were above the $25,000 threshold for vendor verification in the SAM system. Neither vendor was verified by the County to be registered and in good standing in the SAM system. Cause: Condition 1: There was an inadvertent disregard of the bidding requirement by the department head for the $64,518 purchase of office equipment, since the purchase was from a regularly used county vendor who offers government discounts. When the disbursement was processed by the County Clerk, there was a failure to recognize there was a bidding requirement prior to the purchase and a failure of the internal control in disbursement processing which identifies purchase subject to county bid requirements and determines if bid documents are present in supporting documents. Condition 2: There were no policy, procedures or internal controls in place for this requirement, as county personnel were not aware of the requirement. The County Attorney has also been unable to establish an account with SAM, even after engaging a consultant to assist, as the system will not allow multiple log ins for the same entity. Effect of Potential Effect: Denial or extinguishment of sharing requests; temporary or permanent exclusion from the Program; freeze on receipt and/or expenditure of shared funds; return of funds or offsets from future sharing. Questioned Costs: The questioned costs for Condition 1 were $64,518, the amount of the transaction noted in Condition 1. The vendors for these two transactions were determined by the auditor to be vendors in good standing in the SAM system; therefore, Condition 2 does not result in additional questioned costs. Context: There were no other transactions in the population of 2022 expenditures in the major program meeting the county?s bidding threshold requirement or the SAM vendor verification threshold for this program. Recommendation: Condition 1: All department heads should follow the existing procurement policy of the county with respect to bidding. The existing review of documentation by the Clerk?s department to ensure compliance with county bidding requirements should always be properly performed and any exceptions to it referred to the governing body, if necessary, prior to processing of disbursement. Condition 2: A policy and procedure should be developed to ensure compliance with the requirement to verify qualifying status of vendors with annual transactions of $25,000 or more. If department heads are unable to access the SAM system to verify vendor qualification, there should be a request forwarded to the County Clerk to do the verification prior to order of goods or services. Views of responsible officials: The Clerk and the County Attorney concur.

Finding 2021-003: Written Policies and Procedures for Administration of Federal Programs Identification of the Federal Programs: Coronavirus Relief Fund ALN# 21.019 and Conservation Research and Development ALN# 81.086 Criteria: Best practices for designing effective internal controls over financial administration include establishing written policies and procedures describing control objectives and procedures to achieve them. In addition, 2 CRF Section 200 requires written policies and procedures for several compliance requirements. Condition: Sumner County has established written policy and procedures for some financial administrative compliance requirements, but during 2021 did not have written policy and procedures over Cash Management and Subrecipient Monitoring compliance requirements. There were instances of noncompliance that were not material in relation to the Subrecipient Monitoring and Cash Management compliance requirements of the major programs. If written policies and procedures for these compliance areas were in effect, these instances of noncompliance may have been avoided. In addition, while the absence of written policy and procedures is in itself noncompliance, it was not considered material to the compliance requirements of the major programs. Cause: County personnel has had limited experience in managing federal funds and though generally familiar with compliance requirements, lacked the specific knowledge necessary to produce written policies and procedures for these compliance requirements. Effect: There were instances of noncompliance that were not material in relation to the Subrecipient Monitoring and Cash Management compliance requirements for major programs. Questioned Costs: Not applicable Context: The County has written procurement procedures. The County did have program specific written policy for Allowability of Costs of the ALN #21.019 major program, but did not have general written Allowable Cost and Cash Management policies and procedures which would have applied for the ALN #81.086 major program. The lack of written policies and procedures applied to both programs for Subrecipient Monitoring. Recommendation: Appropriate written policy and procedures for federal compliance requirements over Allowability of Cost, Cash Management and Subrecipient Monitoring should be developed and appropriate personnel assigned responsibility for performing and monitoring compliance. The County did adopt appropriate written policy and procedures for these requirements and Property Management in March 2022. Views of Responsible Officials: Management concurs with this finding and recommendation.