Finding 2024-007 – Lack of County-Wide Internal Controls Over Major Federal Program – Local Assistance and Tribal Consistency Fund PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.032 FEDERAL PROGRAM NAME: Local Assistance and Tribal Consistency Fund FEDERAL AWARD YEAR: 2024 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles, Reporting 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 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 the County implement a system of internal controls to ensure compliance with grant requirements. Management Response: Chairman Board of County Commissioners: The BOCC acknowledges the finding, and I will continue efforts to establish and document county-wide internal controls for federal grant programs, including LATCF. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office will continue supporting county-wide efforts to develop and implement internal controls related to federal grant administration and compliance. Financial records maintained by the Treasurer's Office will continue to be available to assist county officials in meeting grant requirements. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Controls – OV1.01 states in part: Definition of Internal Controls Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment – The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment – Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication – The quality information management and personnel communicate and use to support the internal control system. Monitoring – Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2024-008 – Lack of County-Wide Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2024 and 2025 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; and Reporting 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 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 the County design and implement a system of internal controls to ensure compliance with grant requirements. Management Response: Chairman Board of County Commissioners: The current Board of County Commissioners acknowledges the finding. While portions of this finding relate to prior fiscal years, the current Board is committed to strengthening county-wide internal controls over federal programs. The Board has reviewed the audit recommendations and will continue implementing procedures addressing risk assessment, communication, monitoring, and compliance oversight for federal grants. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office serves as custodian of county funds and supports the County's efforts to strengthen internal controls over federal programs. The Treasurer's Office will continue to cooperate with the Board of County Commissioners, County Clerk, and other county officials in developing and implementing county-wide policies and procedures related to federal grant administration. Financial records maintained by the Treasurer's Office will continue to be made available to support compliance, monitoring, and reporting requirements. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Controls – OV1.01 states in part: Definition of Internal Controls Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment – The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment – Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication – The quality information management and personnel communicate and use to support the internal control system. Monitoring – Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2024-009 – Internal Controls Over Major Federal Program – Local Assistance and Tribal Consistency Fund PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.032 FEDERAL PROGRAM NAME: Local Assistance and Tribal Consistency Fund FEDERAL AWARD YEAR: 2024 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Reporting QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements for Coronavirus Relief Fund, we noted that McCurtain County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Reporting. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance with grant requirements and loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for these programs and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman Board of County Commissioners: The current Board of County Commissioners acknowledges the finding. The Board will continue strengthening grant administration procedures and compliance monitoring related to federal programs. Additional review procedures Will be utilized to ensure federal expenditures and reporting requirements are adequately documented and reviewed. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office will continue maintaining accurate accounting records for federal funds received and disbursed through the County and will cooperate with county officials responsible for grant administration to strengthen documentation, monitoring and reporting procedures. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Controls – OV1.01 states in part: Definition of Internal Controls 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. 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).
Finding 2024-010 – Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2024 and 2025 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; and Reporting QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements for Coronavirus State and Local Fiscal Recovery Funds, we noted that McCurtain County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance, Procurement and Suspension and Debarment; and Reporting. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance with grant requirements and loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for these programs and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman Board of County Commissioners: The current Board of County Commissioners acknowledges the finding. The Board is committed to strengthening written procedures related io federal grant administration, including allowable costs, procurement requirements, reporting, and compliance monitoring. Additional review processes will continue to be implemented to improve oversight and documentation. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office is not the administering agency for federal grant programs; however, it will continue maintaining accurate accounting records and providing financial information necessary to support federal reporting, monitoring, andcompliance efforts. The Treasurer's Office supports the implementation of additional county-wide internal controls designed to ensure compliance with federal requirements. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Controls – OV1.01 states in part: Definition of Internal Controls 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. 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).
Finding 2024-011 – Internal Controls and Noncompliance Over Major Federal Program – Local Assistance and Tribal Consistency Fund PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.032 FEDERAL PROGRAM NAME: Local Assistance and Tribal Consistency Fund FEDERAL AWARD YEAR: 2024 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: The annual report for the Local Assistance and Tribal Consistency Fund (LATCF) incorrectly reported $442,815 for cumulative obligations, cumulative expenditures, and current period expenditures; and incorrectly reported $0 in current period obligations. The correct amount for each of these expenditure and obligation categories was $457,559. A variance was noted in each expenditure and obligation category. Cumulative Obligations Cumulative Expenditures Current Period Obligations Current Period Expenditures As Reported $442,815 $442,815 $0 $442,815 Correct Amount $457,559 $457,559 $457,559 $457,559 Variance ($14,744) ($14,744) ($457,559) ($14,744) Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with federal grant guidelines. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and design and implement internal controls to ensure compliance with these requirements. Management Response: Chairman Board of County Commissioners: The current Board of County Commissioners acknowledges the finding. The Board will continue working with county officials, consultants, and auditors involved in grant administration to improve reconciliation and reporting procedures. Additional review steps will be performed to ensure obligations and expenditures reported to federal agencies are supported by county records and accurately reported. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office will continue providing accurate financial information from county accounting records and will assist county officials responsible for grant reporting by providing financial data necessary to reconcile reported expenditures and obligations. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 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). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlines in Part 2 of this guidance. Expenditures may be reported on a cash of accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1.Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish internal controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR 200.329-Monitoring and reporting Program Performance (c)(1) reads as follows: (c)(1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also §200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Finding 2024-012 – Noncompliance with Reporting Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2024 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: During the review of the annual report for calendar year 2023, consisting of seventeen (17) projects for the Coronavirus State and Local Fiscal Recovery Funds, it was noted that the annual report submitted incorrectly reported obligations and expenditures as noted below:36 Current Period Obligations Cumulative Obligations Current Period Expenditure Cumulative Expenditure As Reported $3,598,291 $5,560,331 $2,407,964 $5,085,117 Correct $2,223,500 $6,398,069 $3,053,280 $4,538,934 Variance $1,374,791 ($837,738) ($645,316) $546,183 Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with federal grant guidelines. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and design and implement internal controls to ensure compliance with these requirements. Management Response: Chairman Board of County Commissioners: The BOCC acknowledges the finding, and I will improve reconciliation and review procedures used in preparing federal reports. County officials involved in grant reporting will work together to ensure repotted obligations and expenditures are reconciled to supporting records before submission. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office will continue maintaining accurate accounting records and providing financial information used in federal reporting. The Treasurer's Office will work with county officials and reporting personnel to encourage additional review and reconciliation procedures prior to submission of federal reports. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 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).Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlines in Part 2 of this guidance. Expenditures may be reported on a cash of accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish internal controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR 200.329-Monitoring and reporting Program Performance (c)(1) reads as follows: (c)(1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also §200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.