Finding 2022-012 – Lack of County-Wide Controls Over Major Federal Program – Coronavirus
State and Local Fiscal Recovery Funds (Repeat Finding 2021-011)
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.027
FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds
FEDERAL AWARD NUMBER: SLFRP4587
FEDERAL AWARD YEAR: 2022
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles;
Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring
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. The following
deficiencies were noted:
• The BOCC is aware there are compliance supplement requirements; however, they are not aware
of the specifics of the requirements and there is no one assigned to keep up with the compliance
requirements.
• There is no evidence federal expenditures are presented to the BOCC in an open meeting prior to
submission to the awarding agency.
• The risks of incorrect financial reporting, resulting from fraud or error, for the Schedule of
Expenditures of Federal Awards (SEFA) are not addressed verbally or in written communication.
• The County is relying on the Clerk and Treasurer to ensure the accuracy of the SEFA.
• The individual submitting reports to the U.S. Department of the Treasury is using credentials
assigned to someone else.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure the
County complies 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: Not by way of excuse, but truly in response, the Federal programs
associated with the COVID response were unnecessarily arduous and created confusion at all levels of
government. While the monetary response was accepted, the premise of these programs was nothing more
than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then
“final Interim” and finally, “final” (redundancy intentional). The intent of our national level leadership
became more apparent as these programs progressed with each iteration of programming being reliant on
returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of
their planning with these programs, will be found as fully compliant. As these programs have a sunset in
the near term, I suspect these findings will disappear.
District 2 County Commissioner: I was not in office the year audited, but I will work with other elected
officials to implement a system of internal controls to ensure compliance with grants requirements.
District 3 County Commissioner: The elected officials will work together to implement a system of
internal controls to ensure compliance with 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 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).
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.027
FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds
FEDERAL AWARD NUMBER: SLFRP4587
FEDERAL AWARD YEAR: 2022
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles;
Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring
QUESTIONED COSTS: -$0-
Condition: During the process of documenting the County’s internal controls regarding federal
disbursements, we noted that Washington County has deficiencies in procedures to ensure compliance with
the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Costs
Principles; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring.
• Expenditures are not reviewed for Activities Allowed or Unallowed and Allowable Costs/Costs
Principles.
• The Interim and Project and Expenditure reports are not approved by the BOCC prior to
submission.
• Additionally, the contract with a subrecipient was not renewed annually, nor was the full contract
amount encumbered at the time the contract was initiated.
• The County has not established Subrecipient Monitoring Procedures.
o The County did not enforce the reporting requirements as set out in the Subrecipient
Agreement. The subrecipient submitted quarterly reports for Quarter 1 and Quarter 2 to the
BOCC on August 8, 2022.
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: Not by way of excuse, but truly in response, the Federal programs
associated with the COVID response were unnecessarily arduous and created confusion at all levels of
government. While the monetary response was accepted, the premise of these programs was nothing more
than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then
“final Interim” and finally, “final” (redundancy intentional). The intent of our national level leadership
became more apparent as these programs progressed with each iteration of programming being reliant on
returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of
their planning with these programs, will be found as fully compliant. As these programs have a sunset in
the near term, I suspect these findings will disappear.
District 2 County Commissioner: I was not in office the year audited, but I will work with the other
elected officials to Implement a system of internal controls to ensure compliance with grant requirements.
District 3 County Commissioner: The elected officials will establish sub-recipient monitoring procedures
to remain compliant with all requirements for this type of program.
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.
Finding 2022-012 – Lack of County-Wide Controls Over Major Federal Program – Coronavirus
State and Local Fiscal Recovery Funds (Repeat Finding 2021-011)
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.027
FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds
FEDERAL AWARD NUMBER: SLFRP4587
FEDERAL AWARD YEAR: 2022
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles;
Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring
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. The following
deficiencies were noted:
• The BOCC is aware there are compliance supplement requirements; however, they are not aware
of the specifics of the requirements and there is no one assigned to keep up with the compliance
requirements.
• There is no evidence federal expenditures are presented to the BOCC in an open meeting prior to
submission to the awarding agency.
• The risks of incorrect financial reporting, resulting from fraud or error, for the Schedule of
Expenditures of Federal Awards (SEFA) are not addressed verbally or in written communication.
• The County is relying on the Clerk and Treasurer to ensure the accuracy of the SEFA.
• The individual submitting reports to the U.S. Department of the Treasury is using credentials
assigned to someone else.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure the
County complies 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: Not by way of excuse, but truly in response, the Federal programs
associated with the COVID response were unnecessarily arduous and created confusion at all levels of
government. While the monetary response was accepted, the premise of these programs was nothing more
than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then
“final Interim” and finally, “final” (redundancy intentional). The intent of our national level leadership
became more apparent as these programs progressed with each iteration of programming being reliant on
returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of
their planning with these programs, will be found as fully compliant. As these programs have a sunset in
the near term, I suspect these findings will disappear.
District 2 County Commissioner: I was not in office the year audited, but I will work with other elected
officials to implement a system of internal controls to ensure compliance with grants requirements.
District 3 County Commissioner: The elected officials will work together to implement a system of
internal controls to ensure compliance with 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 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).
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.027
FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds
FEDERAL AWARD NUMBER: SLFRP4587
FEDERAL AWARD YEAR: 2022
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles;
Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring
QUESTIONED COSTS: -$0-
Condition: During the process of documenting the County’s internal controls regarding federal
disbursements, we noted that Washington County has deficiencies in procedures to ensure compliance with
the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Costs
Principles; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring.
• Expenditures are not reviewed for Activities Allowed or Unallowed and Allowable Costs/Costs
Principles.
• The Interim and Project and Expenditure reports are not approved by the BOCC prior to
submission.
• Additionally, the contract with a subrecipient was not renewed annually, nor was the full contract
amount encumbered at the time the contract was initiated.
• The County has not established Subrecipient Monitoring Procedures.
o The County did not enforce the reporting requirements as set out in the Subrecipient
Agreement. The subrecipient submitted quarterly reports for Quarter 1 and Quarter 2 to the
BOCC on August 8, 2022.
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: Not by way of excuse, but truly in response, the Federal programs
associated with the COVID response were unnecessarily arduous and created confusion at all levels of
government. While the monetary response was accepted, the premise of these programs was nothing more
than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then
“final Interim” and finally, “final” (redundancy intentional). The intent of our national level leadership
became more apparent as these programs progressed with each iteration of programming being reliant on
returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of
their planning with these programs, will be found as fully compliant. As these programs have a sunset in
the near term, I suspect these findings will disappear.
District 2 County Commissioner: I was not in office the year audited, but I will work with the other
elected officials to Implement a system of internal controls to ensure compliance with grant requirements.
District 3 County Commissioner: The elected officials will establish sub-recipient monitoring procedures
to remain compliant with all requirements for this type of program.
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.