Finding 2021-006 – Lack of County-Wide Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting and Special Tests and Provisions.
QUESTIONED COSTS: $-0-
Condition: Through the process of gaining an understanding of the County’s internal control structure for federal programs, it was noted that county-wide controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with federal award requirements.
Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in noncompliance to federal award requirements.
Recommendation: The Oklahoma State Auditor & Inspector’s Office (OSAI) recommends that the County design and implement a system of county-wide procedures to identify and address risks related to compliance with federal award requirements and to ensure that information is communicated effectively. OSAI also recommends that the County design and implement monitoring procedures to assess the quality of performance over time. These procedures should be written policies and procedures and could be included in the County’s policies and procedures handbook.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending any federal funds will attend training and to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: The United States Government Accountability Office’s Standards for Internal Control in the Federal Government (2014 version) aided in guiding our assessments and conclusion. Although this publication (GAO Standards) addresses controls in the federal government, this criterion can be treated as best practices and may be applied as a framework for an internal control system for state, local, and quasigovernmental entities.
2 CFR § 200.303 Internal Controls (a) reads as follows:
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).
Also, the GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part:
Definition of Internal Control
Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved.
Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part:
Components, Principles, and Attributes
Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives.
Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses.
Information and Communication - The quality information management and personnel communicate and use to support the internal control system.
Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2021-007 – Lack of Internal Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions
QUESTIONED COSTS: $-0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okfuskee County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Reporting.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with the Uniform Grant Guidance.
Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement internal control procedures to ensure compliance with grant requirements.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending federal FEMA funds will attend training and seminars offered by OSAI, OEM, and Muskogee Creek Nation to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part:
Objectives of an Entity – Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting
QUESTIONED COSTS: $289,739
Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted:
Project Worksheet 88 Questioned Cost - $9,981
The County was unable to produce the following:
• Personnel records for labor that detailed employee hours spent on each site for the project totaling $180.
• Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645.
• Daily Activity Reports for material costs totaling $1,156.
• One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted.
Project Worksheet 607 Questioned Cost - $4,808
• The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808.
Project Worksheet 660 Questioned Cost - $274,950
• The County was unable to produce records or documentation totaling $274,950 for material costs.
• One (1) quarterly report to OEM was not timely submitted.
In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares:
• Project Worksheet 88 totaling $3,327.
• Project Worksheet 660 totaling $51,820.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements.
Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County.
Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection.
Management Response:
Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Title 2 CFR § 200.318 (a), General procurement standards, reads as follows:
a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….]
Title 2 CFR § 200.84 Questioned Cost reads as follows:
Questioned cost means a cost that is questioned by the auditor because of an audit finding:
(a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or
(c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances.
Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part:
Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Finding 2021-006 – Lack of County-Wide Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting and Special Tests and Provisions.
QUESTIONED COSTS: $-0-
Condition: Through the process of gaining an understanding of the County’s internal control structure for federal programs, it was noted that county-wide controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with federal award requirements.
Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in noncompliance to federal award requirements.
Recommendation: The Oklahoma State Auditor & Inspector’s Office (OSAI) recommends that the County design and implement a system of county-wide procedures to identify and address risks related to compliance with federal award requirements and to ensure that information is communicated effectively. OSAI also recommends that the County design and implement monitoring procedures to assess the quality of performance over time. These procedures should be written policies and procedures and could be included in the County’s policies and procedures handbook.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending any federal funds will attend training and to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: The United States Government Accountability Office’s Standards for Internal Control in the Federal Government (2014 version) aided in guiding our assessments and conclusion. Although this publication (GAO Standards) addresses controls in the federal government, this criterion can be treated as best practices and may be applied as a framework for an internal control system for state, local, and quasigovernmental entities.
2 CFR § 200.303 Internal Controls (a) reads as follows:
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).
Also, the GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part:
Definition of Internal Control
Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved.
Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part:
Components, Principles, and Attributes
Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives.
Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses.
Information and Communication - The quality information management and personnel communicate and use to support the internal control system.
Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2021-007 – Lack of Internal Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions
QUESTIONED COSTS: $-0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okfuskee County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Reporting.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with the Uniform Grant Guidance.
Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement internal control procedures to ensure compliance with grant requirements.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending federal FEMA funds will attend training and seminars offered by OSAI, OEM, and Muskogee Creek Nation to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part:
Objectives of an Entity – Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting
QUESTIONED COSTS: $289,739
Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted:
Project Worksheet 88 Questioned Cost - $9,981
The County was unable to produce the following:
• Personnel records for labor that detailed employee hours spent on each site for the project totaling $180.
• Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645.
• Daily Activity Reports for material costs totaling $1,156.
• One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted.
Project Worksheet 607 Questioned Cost - $4,808
• The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808.
Project Worksheet 660 Questioned Cost - $274,950
• The County was unable to produce records or documentation totaling $274,950 for material costs.
• One (1) quarterly report to OEM was not timely submitted.
In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares:
• Project Worksheet 88 totaling $3,327.
• Project Worksheet 660 totaling $51,820.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements.
Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County.
Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection.
Management Response:
Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Title 2 CFR § 200.318 (a), General procurement standards, reads as follows:
a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….]
Title 2 CFR § 200.84 Questioned Cost reads as follows:
Questioned cost means a cost that is questioned by the auditor because of an audit finding:
(a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or
(c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances.
Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part:
Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Finding 2021-006 – Lack of County-Wide Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting and Special Tests and Provisions.
QUESTIONED COSTS: $-0-
Condition: Through the process of gaining an understanding of the County’s internal control structure for federal programs, it was noted that county-wide controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with federal award requirements.
Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in noncompliance to federal award requirements.
Recommendation: The Oklahoma State Auditor & Inspector’s Office (OSAI) recommends that the County design and implement a system of county-wide procedures to identify and address risks related to compliance with federal award requirements and to ensure that information is communicated effectively. OSAI also recommends that the County design and implement monitoring procedures to assess the quality of performance over time. These procedures should be written policies and procedures and could be included in the County’s policies and procedures handbook.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending any federal funds will attend training and to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: The United States Government Accountability Office’s Standards for Internal Control in the Federal Government (2014 version) aided in guiding our assessments and conclusion. Although this publication (GAO Standards) addresses controls in the federal government, this criterion can be treated as best practices and may be applied as a framework for an internal control system for state, local, and quasigovernmental entities.
2 CFR § 200.303 Internal Controls (a) reads as follows:
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).
Also, the GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part:
Definition of Internal Control
Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved.
Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part:
Components, Principles, and Attributes
Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives.
Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses.
Information and Communication - The quality information management and personnel communicate and use to support the internal control system.
Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2021-007 – Lack of Internal Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions
QUESTIONED COSTS: $-0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okfuskee County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Reporting.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with the Uniform Grant Guidance.
Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement internal control procedures to ensure compliance with grant requirements.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending federal FEMA funds will attend training and seminars offered by OSAI, OEM, and Muskogee Creek Nation to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part:
Objectives of an Entity – Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting
QUESTIONED COSTS: $289,739
Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted:
Project Worksheet 88 Questioned Cost - $9,981
The County was unable to produce the following:
• Personnel records for labor that detailed employee hours spent on each site for the project totaling $180.
• Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645.
• Daily Activity Reports for material costs totaling $1,156.
• One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted.
Project Worksheet 607 Questioned Cost - $4,808
• The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808.
Project Worksheet 660 Questioned Cost - $274,950
• The County was unable to produce records or documentation totaling $274,950 for material costs.
• One (1) quarterly report to OEM was not timely submitted.
In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares:
• Project Worksheet 88 totaling $3,327.
• Project Worksheet 660 totaling $51,820.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements.
Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County.
Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection.
Management Response:
Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Title 2 CFR § 200.318 (a), General procurement standards, reads as follows:
a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….]
Title 2 CFR § 200.84 Questioned Cost reads as follows:
Questioned cost means a cost that is questioned by the auditor because of an audit finding:
(a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or
(c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances.
Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part:
Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Finding 2021-006 – Lack of County-Wide Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting and Special Tests and Provisions.
QUESTIONED COSTS: $-0-
Condition: Through the process of gaining an understanding of the County’s internal control structure for federal programs, it was noted that county-wide controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with federal award requirements.
Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in noncompliance to federal award requirements.
Recommendation: The Oklahoma State Auditor & Inspector’s Office (OSAI) recommends that the County design and implement a system of county-wide procedures to identify and address risks related to compliance with federal award requirements and to ensure that information is communicated effectively. OSAI also recommends that the County design and implement monitoring procedures to assess the quality of performance over time. These procedures should be written policies and procedures and could be included in the County’s policies and procedures handbook.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending any federal funds will attend training and to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: The United States Government Accountability Office’s Standards for Internal Control in the Federal Government (2014 version) aided in guiding our assessments and conclusion. Although this publication (GAO Standards) addresses controls in the federal government, this criterion can be treated as best practices and may be applied as a framework for an internal control system for state, local, and quasigovernmental entities.
2 CFR § 200.303 Internal Controls (a) reads as follows:
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).
Also, the GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part:
Definition of Internal Control
Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved.
Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part:
Components, Principles, and Attributes
Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives.
Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses.
Information and Communication - The quality information management and personnel communicate and use to support the internal control system.
Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2021-007 – Lack of Internal Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions
QUESTIONED COSTS: $-0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okfuskee County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Reporting.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with the Uniform Grant Guidance.
Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement internal control procedures to ensure compliance with grant requirements.
Management Response:
Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending federal FEMA funds will attend training and seminars offered by OSAI, OEM, and Muskogee Creek Nation to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings.
Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part:
Objectives of an Entity – Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters)
PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management
FEDERAL AGENCY: U.S. Department of Homeland Security
ASSISTANCE LISTING: 97.036
FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters)
FEDERAL AWARD NUMBER: DR 4438 and DR 4453
FEDERAL AWARD YEAR: 2021
CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting
QUESTIONED COSTS: $289,739
Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted:
Project Worksheet 88 Questioned Cost - $9,981
The County was unable to produce the following:
• Personnel records for labor that detailed employee hours spent on each site for the project totaling $180.
• Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645.
• Daily Activity Reports for material costs totaling $1,156.
• One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted.
Project Worksheet 607 Questioned Cost - $4,808
• The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808.
Project Worksheet 660 Questioned Cost - $274,950
• The County was unable to produce records or documentation totaling $274,950 for material costs.
• One (1) quarterly report to OEM was not timely submitted.
In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares:
• Project Worksheet 88 totaling $3,327.
• Project Worksheet 660 totaling $51,820.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements.
Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County.
Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection.
Management Response:
Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time.
Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows:
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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Title 2 CFR § 200.318 (a), General procurement standards, reads as follows:
a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….]
Title 2 CFR § 200.84 Questioned Cost reads as follows:
Questioned cost means a cost that is questioned by the auditor because of an audit finding:
(a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or
(c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances.
Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part:
Compliance Objectives
Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]