PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $-0-
Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736.
The following misstatements were noted:
• The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304.
• The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226.
• The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227.
• The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183.
Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230.
Furthermore, the County did not prepare Notes to the SEFA.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required.
Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA.
Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements.
County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA.
County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy.
County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared.
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).
2 CFR § 200.508(b) Auditee responsibilities reads as follows:
The auditee must:
Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements.
2 CFR § 200.510 (b) Financial statements reads as follows:
Schedule of expenditures of Federal awards.
The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….]
2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…”
Additionally, 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.
Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states:
Definitions of Objectives
Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
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 internal 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 grant 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 unrecorded transactions, undetected errors, misappropriation of funds, and noncompliance with federal grant requirements.
Recommendation: OSAI recommends that the County implement a system of internal controls to ensure compliance with grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to design and implement written procedures to address county-wide controls over federal programs and to ensure compliance with grant agreements.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
Criteria: 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.
Furthermore, 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).
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: -$0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okmulgee County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal program expenditures are made in accordance with federal compliance requirements.
Effect of Condition: This condition attributed to the noncompliance with grant requirements and could lead to the loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with all requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I did not take office until January of 2021, several months after the County had decided to apply for Coronavirus Relief Funds. However, I will work with the other elected officials on all current and future federal grants to design and implement internal controls to ensure compliance with all federal compliance requirements.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
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).
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 Activities – The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $868,053
Condition: The County submitted and received reimbursement for $1,269,227 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $868,053 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs.
• The County was reimbursed $783,766 for payroll expenditures for the OCCJA for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County.
• The County was reimbursed $71,376 for General Government payroll expenditures for multiple county employees. The reimbursement of these funds was determined to be unallowable as these were not expenditures to mitigate or prevent the spread of COVID-19 as required by the grant agreement.
• The County was reimbursed $12,500 in payroll expenditures for the County’s Emergency Management Department. The reimbursement of these funds was determined to be unallowable, as these costs were previously reimbursed or will be reimbursed by another federal program.
• The County was reimbursed for $411 in costs that the County could not provide documentation to support the expenditures.
• The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost.
Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, these conditions could result in the repayment of funds.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. My understanding is Okmulgee County relied on the State of Oklahoma Office of Management and Enterprise Services (OMES) as the overseer of eligible expenditures. OMES approved the expenditures for reimbursement.
District 2 County Commissioner: I did not take office until January of 2021, months after the County had submitted expenditures for reimbursement from the Coronavirus Relief Fund and my understanding of the submission process is that the County sent all reimbursement documentation to OMES, who were responsible for vetting the submissions. All submission made by Okmulgee County to OMES were approved and reimbursed by OMES.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
Additionally, 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).
2 CFR § 200.403 - Factors affecting allowability costs states in relevant part,
Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:
(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.
(g) Be adequately documented.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $-0-
Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736.
The following misstatements were noted:
• The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304.
• The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226.
• The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227.
• The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183.
Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230.
Furthermore, the County did not prepare Notes to the SEFA.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required.
Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA.
Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements.
County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA.
County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy.
County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared.
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).
2 CFR § 200.508(b) Auditee responsibilities reads as follows:
The auditee must:
Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements.
2 CFR § 200.510 (b) Financial statements reads as follows:
Schedule of expenditures of Federal awards.
The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….]
2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…”
Additionally, 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.
Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states:
Definitions of Objectives
Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
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 internal 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 grant 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 unrecorded transactions, undetected errors, misappropriation of funds, and noncompliance with federal grant requirements.
Recommendation: OSAI recommends that the County implement a system of internal controls to ensure compliance with grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to design and implement written procedures to address county-wide controls over federal programs and to ensure compliance with grant agreements.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
Criteria: 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.
Furthermore, 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).
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: -$0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okmulgee County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal program expenditures are made in accordance with federal compliance requirements.
Effect of Condition: This condition attributed to the noncompliance with grant requirements and could lead to the loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with all requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I did not take office until January of 2021, several months after the County had decided to apply for Coronavirus Relief Funds. However, I will work with the other elected officials on all current and future federal grants to design and implement internal controls to ensure compliance with all federal compliance requirements.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
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).
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 Activities – The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $868,053
Condition: The County submitted and received reimbursement for $1,269,227 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $868,053 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs.
• The County was reimbursed $783,766 for payroll expenditures for the OCCJA for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County.
• The County was reimbursed $71,376 for General Government payroll expenditures for multiple county employees. The reimbursement of these funds was determined to be unallowable as these were not expenditures to mitigate or prevent the spread of COVID-19 as required by the grant agreement.
• The County was reimbursed $12,500 in payroll expenditures for the County’s Emergency Management Department. The reimbursement of these funds was determined to be unallowable, as these costs were previously reimbursed or will be reimbursed by another federal program.
• The County was reimbursed for $411 in costs that the County could not provide documentation to support the expenditures.
• The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost.
Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, these conditions could result in the repayment of funds.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. My understanding is Okmulgee County relied on the State of Oklahoma Office of Management and Enterprise Services (OMES) as the overseer of eligible expenditures. OMES approved the expenditures for reimbursement.
District 2 County Commissioner: I did not take office until January of 2021, months after the County had submitted expenditures for reimbursement from the Coronavirus Relief Fund and my understanding of the submission process is that the County sent all reimbursement documentation to OMES, who were responsible for vetting the submissions. All submission made by Okmulgee County to OMES were approved and reimbursed by OMES.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
Additionally, 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).
2 CFR § 200.403 - Factors affecting allowability costs states in relevant part,
Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:
(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.
(g) Be adequately documented.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $-0-
Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736.
The following misstatements were noted:
• The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304.
• The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226.
• The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227.
• The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183.
Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230.
Furthermore, the County did not prepare Notes to the SEFA.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required.
Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA.
Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements.
County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA.
County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy.
County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared.
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).
2 CFR § 200.508(b) Auditee responsibilities reads as follows:
The auditee must:
Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements.
2 CFR § 200.510 (b) Financial statements reads as follows:
Schedule of expenditures of Federal awards.
The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….]
2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…”
Additionally, 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.
Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states:
Definitions of Objectives
Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
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 internal 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 grant 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 unrecorded transactions, undetected errors, misappropriation of funds, and noncompliance with federal grant requirements.
Recommendation: OSAI recommends that the County implement a system of internal controls to ensure compliance with grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to design and implement written procedures to address county-wide controls over federal programs and to ensure compliance with grant agreements.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
Criteria: 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.
Furthermore, 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).
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: -$0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okmulgee County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal program expenditures are made in accordance with federal compliance requirements.
Effect of Condition: This condition attributed to the noncompliance with grant requirements and could lead to the loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with all requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I did not take office until January of 2021, several months after the County had decided to apply for Coronavirus Relief Funds. However, I will work with the other elected officials on all current and future federal grants to design and implement internal controls to ensure compliance with all federal compliance requirements.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
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).
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 Activities – The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $868,053
Condition: The County submitted and received reimbursement for $1,269,227 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $868,053 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs.
• The County was reimbursed $783,766 for payroll expenditures for the OCCJA for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County.
• The County was reimbursed $71,376 for General Government payroll expenditures for multiple county employees. The reimbursement of these funds was determined to be unallowable as these were not expenditures to mitigate or prevent the spread of COVID-19 as required by the grant agreement.
• The County was reimbursed $12,500 in payroll expenditures for the County’s Emergency Management Department. The reimbursement of these funds was determined to be unallowable, as these costs were previously reimbursed or will be reimbursed by another federal program.
• The County was reimbursed for $411 in costs that the County could not provide documentation to support the expenditures.
• The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost.
Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, these conditions could result in the repayment of funds.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. My understanding is Okmulgee County relied on the State of Oklahoma Office of Management and Enterprise Services (OMES) as the overseer of eligible expenditures. OMES approved the expenditures for reimbursement.
District 2 County Commissioner: I did not take office until January of 2021, months after the County had submitted expenditures for reimbursement from the Coronavirus Relief Fund and my understanding of the submission process is that the County sent all reimbursement documentation to OMES, who were responsible for vetting the submissions. All submission made by Okmulgee County to OMES were approved and reimbursed by OMES.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
Additionally, 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).
2 CFR § 200.403 - Factors affecting allowability costs states in relevant part,
Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:
(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.
(g) Be adequately documented.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $-0-
Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736.
The following misstatements were noted:
• The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304.
• The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226.
• The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227.
• The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183.
Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230.
Furthermore, the County did not prepare Notes to the SEFA.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required.
Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA.
Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements.
County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA.
County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy.
County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared.
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).
2 CFR § 200.508(b) Auditee responsibilities reads as follows:
The auditee must:
Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements.
2 CFR § 200.510 (b) Financial statements reads as follows:
Schedule of expenditures of Federal awards.
The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….]
2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…”
Additionally, 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.
Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states:
Definitions of Objectives
Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
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 internal 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 grant 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 unrecorded transactions, undetected errors, misappropriation of funds, and noncompliance with federal grant requirements.
Recommendation: OSAI recommends that the County implement a system of internal controls to ensure compliance with grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to design and implement written procedures to address county-wide controls over federal programs and to ensure compliance with grant agreements.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
Criteria: 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.
Furthermore, 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).
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: -$0-
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okmulgee County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal program expenditures are made in accordance with federal compliance requirements.
Effect of Condition: This condition attributed to the noncompliance with grant requirements and could lead to the loss of federal funds to the County.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with all requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I did not take office until January of 2021, several months after the County had decided to apply for Coronavirus Relief Funds. However, I will work with the other elected officials on all current and future federal grants to design and implement internal controls to ensure compliance with all federal compliance requirements.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other officials to design and implement a system of internal control to ensure compliance with all applicable grant requirements.
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).
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 Activities – The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office and Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $868,053
Condition: The County submitted and received reimbursement for $1,269,227 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $868,053 was not expended in accordance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance due to ineligible costs.
• The County was reimbursed $783,766 for payroll expenditures for the OCCJA for the period of March 2020, through August 2020. The reimbursement of these funds was determined to be unallowable, as these costs were not expenditures of the County.
• The County was reimbursed $71,376 for General Government payroll expenditures for multiple county employees. The reimbursement of these funds was determined to be unallowable as these were not expenditures to mitigate or prevent the spread of COVID-19 as required by the grant agreement.
• The County was reimbursed $12,500 in payroll expenditures for the County’s Emergency Management Department. The reimbursement of these funds was determined to be unallowable, as these costs were previously reimbursed or will be reimbursed by another federal program.
• The County was reimbursed for $411 in costs that the County could not provide documentation to support the expenditures.
• The County relied on the Oklahoma Office of Management and Enterprise Services to ensure that the County reimbursement request was for eligible expenditures.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure that the County has proper internal controls over federal grant expenditures and that the expenditures were for an allowable cost.
Effect of Condition: These conditions resulted in noncompliance with federal grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, these conditions could result in the repayment of funds.
Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. My understanding is Okmulgee County relied on the State of Oklahoma Office of Management and Enterprise Services (OMES) as the overseer of eligible expenditures. OMES approved the expenditures for reimbursement.
District 2 County Commissioner: I did not take office until January of 2021, months after the County had submitted expenditures for reimbursement from the Coronavirus Relief Fund and my understanding of the submission process is that the County sent all reimbursement documentation to OMES, who were responsible for vetting the submissions. All submission made by Okmulgee County to OMES were approved and reimbursed by OMES.
District 3 County Commissioner: I took office January 3, 2023, I will work with other officials to design and implement policies and procedures to ensure compliance with all applicable grant requirements.
Criteria: Title 42 United States Code § 801 – Coronavirus relief fund Section 801(d) requires the States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
Additionally, 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).
2 CFR § 200.403 - Factors affecting allowability costs states in relevant part,
Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:
(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.
(g) Be adequately documented.