Finding # 2021-002 Program: Various, including AL 97.036 – Disaster Grants - Public Assistance (Presidentially Declared Disasters) – Reporting Grant Number & Year: Various Federal Grantor Agency: Various, including U.S. Department of Homeland Security Pass-Through Entity: Various, including Nebraska Military Department Criteria: Title 2 of the U.S. Code of Federal Regulations (CFR) § 200.512(a)(1) (January 1, 2021) states the following: The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Title 2 CFR § 200.508 (January 1, 2021) states, in part, the following: The auditee must: (a) Procure or otherwise arrange for the audit required by this part in accordance with §200.509, and ensure it is properly performed and submitted when due in accordance with §200.512. Title 2 CFR § 200.303 (January 1, 2021) states the following, in relevant part: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ‘‘Standards for Internal Control in the Federal Government’’ issued by the Comptroller General of the United States or the ‘‘Internal Control Integrated Framework’’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). A good internal control plan requires adequate procedures to ensure the audit is completed and submitted to the Federal Audit Clearinghouse within the time frame required by Title 2 CFR § 200.512. Condition: Garfield County did not have adequate procedures in place to monitor Federal expenditures and ensure a Single Audit was completed and submitted to the Federal Audit Clearinghouse in accordance with Title 2 CFR § 200.512. Consequently, the County had a basic financial statement audit completed for the fiscal year ending June 30, 2021, which was issued on September 15, 2021, but that audit did not include the additional information necessary to meet Uniform Guidance and Single Audit Act requirements. When the audit for the fiscal year ending June 30, 2022 was completed, the Auditor of Public Accounts identified that the County should have had a Single Audit completed for the fiscal year ending June 30, 2021. Repeat Finding: No Questioned Costs: None Statistical Sample: No Cause: Overall lack of knowledge and experience by County personnel related to Federal reporting and compliance requirements; misunderstanding of when expenditures for AL # 97.036 were required to be reported on the Schedule of Expenditures of Federal Awards. Effect: Noncompliance with Federal regulations, which could lead to Federal sanctions, and Single Audits not being completed when required. Recommendation: We recommend the County obtain necessary training related to Federal reporting requirements, establish written procedures for closely monitoring Federal expenditures, and ensure a Single audit is completed and submitted to the Federal Audit Clearinghouse within the time frame required by Title 2 CFR § 200.512. View of Officials: The County plans to make sure and have proper education and obtain training to ensure County personnel are aware of Federal reporting requirements and understanding of the schedule of expenditures of Federal awards.
Finding 2021-006 – Lack of County-Wide Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting and Special Tests and Provisions. QUESTIONED COSTS: $-0- Condition: Through the process of gaining an understanding of the County’s internal control structure for federal programs, it was noted that county-wide controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed. Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with federal award requirements. Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in noncompliance to federal award requirements. Recommendation: The Oklahoma State Auditor & Inspector’s Office (OSAI) recommends that the County design and implement a system of county-wide procedures to identify and address risks related to compliance with federal award requirements and to ensure that information is communicated effectively. OSAI also recommends that the County design and implement monitoring procedures to assess the quality of performance over time. These procedures should be written policies and procedures and could be included in the County’s policies and procedures handbook. Management Response: Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending any federal funds will attend training and to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings. Criteria: The United States Government Accountability Office’s Standards for Internal Control in the Federal Government (2014 version) aided in guiding our assessments and conclusion. Although this publication (GAO Standards) addresses controls in the federal government, this criterion can be treated as best practices and may be applied as a framework for an internal control system for state, local, and quasigovernmental entities. 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: (a)Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, the GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2021-007 – Lack of Internal Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okfuskee County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Reporting. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with the Uniform Grant Guidance. Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement internal control procedures to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending federal FEMA funds will attend training and seminars offered by OSAI, OEM, and Muskogee Creek Nation to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Finding 2021-006 – Lack of County-Wide Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting and Special Tests and Provisions. QUESTIONED COSTS: $-0- Condition: Through the process of gaining an understanding of the County’s internal control structure for federal programs, it was noted that county-wide controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed. Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with federal award requirements. Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in noncompliance to federal award requirements. Recommendation: The Oklahoma State Auditor & Inspector’s Office (OSAI) recommends that the County design and implement a system of county-wide procedures to identify and address risks related to compliance with federal award requirements and to ensure that information is communicated effectively. OSAI also recommends that the County design and implement monitoring procedures to assess the quality of performance over time. These procedures should be written policies and procedures and could be included in the County’s policies and procedures handbook. Management Response: Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending any federal funds will attend training and to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings. Criteria: The United States Government Accountability Office’s Standards for Internal Control in the Federal Government (2014 version) aided in guiding our assessments and conclusion. Although this publication (GAO Standards) addresses controls in the federal government, this criterion can be treated as best practices and may be applied as a framework for an internal control system for state, local, and quasigovernmental entities. 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: (a)Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, the GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Finding 2021-007 – Lack of Internal Controls Over Major Federal Program - Disaster Grants - Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Reporting, and Special Tests and Provisions QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Okfuskee County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Reporting. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with the Uniform Grant Guidance. Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement internal control procedures to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: Officials and employees tasked with the responsibility of expending federal FEMA funds will attend training and seminars offered by OSAI, OEM, and Muskogee Creek Nation to better understand the guidelines. Information received will be communicated to the other officials at the quarterly meetings. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Criteria The A-102 Common Rule, OMB Circular A-110 and 2 CFR section 200.303 require that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR section 200.514 requires auditors to obtain an understanding of the non-Federal entity’s internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs, and, unless internal control is likely to be ineffective, plan the testing of internal control over major programs to support a low assessed level of control risk for the assertions relevant to the compliance requirements for each major program and perform testing of internal control as planned. Condition As noted in finding 2021-004, the City informed the auditors of a significant break down of internal controls resulting in them to be ineffective through most of the fiscal year. Cause Due to personnel turnover and the recent implementation of a new accounting system, the City did not have adequate controls and oversight in place to ensure accounting transactions were being processed accurately and timely. Unfamiliarity with the financial accounting system lead to inconsistencies in how transactions were being recorded Effect The City lacked internal controls to support a low assessed level of control risk for the assertions relevant to compliance requirements for the major program tested. Recommendation We recommend that the City institute a program to methodically identify and document its significant operational and accounting processes as they relate to Federal grants and compliance. Documenting a process involves identifying and gaining an understanding of the required compliance requirements, the automated or manual procedures used in performing the required processes, the person(s) or position(s) responsible for performing the procedures, the source documents used or generated, the procedures for approval and review and correction of any errors detected, and the financial or operational entries or reports summarizing the result of the process. View of Responsible Officials Management informed the auditors of this condition and agrees with the comment. Management also acknowledges that this occurred due to the staff turnover and subsequent difficulties in hiring mentioned in comments 2021-001, 002, and 003. In 2021-2022 the foundational processes have been stabilized (accounts payable, payroll, deposits) allowing staff to focus on reconciliations, procedures, and audit. As processes are brought current or accounts are reconciled, staff will document procedures and ensure that internal controls are incorporated into the procedures.
Criteria The A-102 Common Rule, OMB Circular A-110 and 2 CFR section 200.303 require that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR section 200.514 requires auditors to obtain an understanding of the non-Federal entity’s internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs, and, unless internal control is likely to be ineffective, plan the testing of internal control over major programs to support a low assessed level of control risk for the assertions relevant to the compliance requirements for each major program and perform testing of internal control as planned. Condition As noted in finding 2021-004, the City informed the auditors of a significant break down of internal controls resulting in them to be ineffective through most of the fiscal year. Cause Due to personnel turnover and the recent implementation of a new accounting system, the City did not have adequate controls and oversight in place to ensure accounting transactions were being processed accurately and timely. Unfamiliarity with the financial accounting system lead to inconsistencies in how transactions were being recorded Effect The City lacked internal controls to support a low assessed level of control risk for the assertions relevant to compliance requirements for the major program tested. Recommendation We recommend that the City institute a program to methodically identify and document its significant operational and accounting processes as they relate to Federal grants and compliance. Documenting a process involves identifying and gaining an understanding of the required compliance requirements, the automated or manual procedures used in performing the required processes, the person(s) or position(s) responsible for performing the procedures, the source documents used or generated, the procedures for approval and review and correction of any errors detected, and the financial or operational entries or reports summarizing the result of the process. View of Responsible Officials Management informed the auditors of this condition and agrees with the comment. Management also acknowledges that this occurred due to the staff turnover and subsequent difficulties in hiring mentioned in comments 2021-001, 002, and 003. In 2021-2022 the foundational processes have been stabilized (accounts payable, payroll, deposits) allowing staff to focus on reconciliations, procedures, and audit. As processes are brought current or accounts are reconciled, staff will document procedures and ensure that internal controls are incorporated into the procedures.
Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $28,918 Context: During testing, we noted the following issues in a sample of thirteen head start cluster account payable claims: • One sample selection was not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $27,001. • The Unit paid $1,917 in sales tax on one sample selection which is an unallowable cost. The Unit is tax-exempt as a governmental entity in the state and should not pay sales tax. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-001. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $28,918 Context: During testing, we noted the following issues in a sample of thirteen head start cluster account payable claims: • One sample selection was not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $27,001. • The Unit paid $1,917 in sales tax on one sample selection which is an unallowable cost. The Unit is tax-exempt as a governmental entity in the state and should not pay sales tax. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-001. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $28,918 Context: During testing, we noted the following issues in a sample of thirteen head start cluster account payable claims: • One sample selection was not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $27,001. • The Unit paid $1,917 in sales tax on one sample selection which is an unallowable cost. The Unit is tax-exempt as a governmental entity in the state and should not pay sales tax. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-001. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $28,918 Context: During testing, we noted the following issues in a sample of thirteen head start cluster account payable claims: • One sample selection was not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $27,001. • The Unit paid $1,917 in sales tax on one sample selection which is an unallowable cost. The Unit is tax-exempt as a governmental entity in the state and should not pay sales tax. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-001. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $28,918 Context: During testing, we noted the following issues in a sample of thirteen head start cluster account payable claims: • One sample selection was not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $27,001. • The Unit paid $1,917 in sales tax on one sample selection which is an unallowable cost. The Unit is tax-exempt as a governmental entity in the state and should not pay sales tax. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-001. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Internal Controls Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: We noted that for two federal financial reports in a sample of two reports, the Supervisor prepared the report without a secondary, documented review before the submission of the report to ensure the accuracy of the report. The amounts reported agreed to the supporting records without error. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-003. Recommendation: We recommended that the Unit implement a documented, formal review of the reports before they are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Internal Controls Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: We noted that for two federal financial reports in a sample of two reports, the Supervisor prepared the report without a secondary, documented review before the submission of the report to ensure the accuracy of the report. The amounts reported agreed to the supporting records without error. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-003. Recommendation: We recommended that the Unit implement a documented, formal review of the reports before they are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Internal Controls Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: We noted that for two federal financial reports in a sample of two reports, the Supervisor prepared the report without a secondary, documented review before the submission of the report to ensure the accuracy of the report. The amounts reported agreed to the supporting records without error. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-003. Recommendation: We recommended that the Unit implement a documented, formal review of the reports before they are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Internal Controls Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: We noted that for two federal financial reports in a sample of two reports, the Supervisor prepared the report without a secondary, documented review before the submission of the report to ensure the accuracy of the report. The amounts reported agreed to the supporting records without error. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-003. Recommendation: We recommended that the Unit implement a documented, formal review of the reports before they are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster - Internal Controls Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." Condition: An effective internal control system was not in place at the Unit in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: We noted that for two federal financial reports in a sample of two reports, the Supervisor prepared the report without a secondary, documented review before the submission of the report to ensure the accuracy of the report. The amounts reported agreed to the supporting records without error. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-003. Recommendation: We recommended that the Unit implement a documented, formal review of the reports before they are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Federal Program: COVID-19 – Coronavirus Relief Fund ALN 21.019 Award Number and Year: 2020 C019 Name of Federal Agency and Pass-Through Agency: U.S. Department of Treasury Passed-Through Kentucky Department for Local Government Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Type of Finding: Material Weakness Amount of Questioned Costs: None Effect on Audit Opinion: Disclaimer of Opinion COVID Related: Yes The Breathitt County Fiscal Court Failed To Implement And Maintain An Effective Internal Control Environment: The Breathitt County Fiscal Court’s current practices could create an environment for potential undetected material misstatements in the financial statements caused either by error or fraud. The noted weaknesses could affect the fiscal court’s ability to ensure that financial data is recorded, processed, and reported in an accurate and reliable manner and ensure that assets are sufficiently safeguarded. If the Breathitt County Fiscal Court continues these poor financial practices and does not improve the internal control structure, taxpayer monies will continue to be at risk. In addition, various local and state agencies that rely on and monitor the financial and program activity of the Breathitt County Fiscal Court cannot rely on, or have any confidence in, the reports submitted by the Breathitt County Fiscal Court. Proper accounting procedures and internal controls require that financial statements be supported with accurate underlying accounting records. Strong internal controls over financial reporting are vital in ensuring the fiscal court’s financial statement accurately reflects the financial activity of the fiscal court and ensures compliance with applicable state and federal laws and regulations. Additionally, complete, and accurate financial records can ensure expenditures are made only when sufficient funds are available, and receipts are properly recorded. In addition, 2 CFR 200.303 states in part, "[t]he non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” We recommend the Breathitt County Fiscal Court provide sufficient management oversight of the day-to-day financial activities of the county. We further recommend the fiscal court improve its overall control environment in order to ensure sufficient accounting records are maintained to support transactions, accounts are reconciled, and bills are paid timely, and duties are adequately segregated to safeguard public assets. Only with a strong internal controls system can the fiscal court prepare and ensure that complete and accurate financial reports are completed and that the county is in compliance with each major federal
Federal Program: COVID-19 – Coronavirus Relief Fund ALN 21.019 Award Number and Year: 2020 C019 Name of Federal Agency and Pass-Through Agency: U.S. Department of Treasury Passed-Through Kentucky Department for Local Government Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Type of Finding: Material Weakness Amount of Questioned Costs: None Effect on Audit Opinion: Disclaimer of Opinion COVID Related: Yes The Breathitt County Fiscal Court Failed To Implement And Maintain An Effective Internal Control Environment: The Breathitt County Fiscal Court’s current practices could create an environment for potential undetected material misstatements in the financial statements caused either by error or fraud. The noted weaknesses could affect the fiscal court’s ability to ensure that financial data is recorded, processed, and reported in an accurate and reliable manner and ensure that assets are sufficiently safeguarded. If the Breathitt County Fiscal Court continues these poor financial practices and does not improve the internal control structure, taxpayer monies will continue to be at risk. In addition, various local and state agencies that rely on and monitor the financial and program activity of the Breathitt County Fiscal Court cannot rely on, or have any confidence in, the reports submitted by the Breathitt County Fiscal Court. Proper accounting procedures and internal controls require that financial statements be supported with accurate underlying accounting records. Strong internal controls over financial reporting are vital in ensuring the fiscal court’s financial statement accurately reflects the financial activity of the fiscal court and ensures compliance with applicable state and federal laws and regulations. Additionally, complete, and accurate financial records can ensure expenditures are made only when sufficient funds are available, and receipts are properly recorded. In addition, 2 CFR 200.303 states in part, "[t]he non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” We recommend the Breathitt County Fiscal Court provide sufficient management oversight of the day-to-day financial activities of the county. We further recommend the fiscal court improve its overall control environment in order to ensure sufficient accounting records are maintained to support transactions, accounts are reconciled, and bills are paid timely, and duties are adequately segregated to safeguard public assets. Only with a strong internal controls system can the fiscal court prepare and ensure that complete and accurate financial reports are completed and that the county is in compliance with each major federal
Federal Program: COVID-19 – Coronavirus Relief Fund ALN 21.019 Award Number and Year: 2020 C019 Name of Federal Agency and Pass-Through Agency: U.S. Department of Treasury Passed-Through Kentucky Department for Local Government Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Type of Finding: Material Weakness Amount of Questioned Costs: None Effect on Audit Opinion: Disclaimer of Opinion COVID Related: Yes The Breathitt County Fiscal Court Failed To Implement And Maintain An Effective Internal Control Environment: The Breathitt County Fiscal Court’s current practices could create an environment for potential undetected material misstatements in the financial statements caused either by error or fraud. The noted weaknesses could affect the fiscal court’s ability to ensure that financial data is recorded, processed, and reported in an accurate and reliable manner and ensure that assets are sufficiently safeguarded. If the Breathitt County Fiscal Court continues these poor financial practices and does not improve the internal control structure, taxpayer monies will continue to be at risk. In addition, various local and state agencies that rely on and monitor the financial and program activity of the Breathitt County Fiscal Court cannot rely on, or have any confidence in, the reports submitted by the Breathitt County Fiscal Court. Proper accounting procedures and internal controls require that financial statements be supported with accurate underlying accounting records. Strong internal controls over financial reporting are vital in ensuring the fiscal court’s financial statement accurately reflects the financial activity of the fiscal court and ensures compliance with applicable state and federal laws and regulations. Additionally, complete, and accurate financial records can ensure expenditures are made only when sufficient funds are available, and receipts are properly recorded. In addition, 2 CFR 200.303 states in part, "[t]he non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” We recommend the Breathitt County Fiscal Court provide sufficient management oversight of the day-to-day financial activities of the county. We further recommend the fiscal court improve its overall control environment in order to ensure sufficient accounting records are maintained to support transactions, accounts are reconciled, and bills are paid timely, and duties are adequately segregated to safeguard public assets. Only with a strong internal controls system can the fiscal court prepare and ensure that complete and accurate financial reports are completed and that the county is in compliance with each major federal
Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal 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 statues, 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). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.
Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal 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 statues, 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). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.
Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal 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 statues, 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). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.
Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal 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 statues, 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). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.
Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal 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 statues, 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). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.
Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal 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 statues, 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). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.
Federal Agency: U.S. Department of Agriculture Assistance Listing Numbers: 10.565, 10.568, and 10.569 Federal Program Names: Food Distribution Cluster Pass-through Entity: Washington State Department of Agriculture Pass-through Award Number: K2764 Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.019 Federal Program Name: Coronavirus Relief Fund Pass-through Entity: Washington State Department of Agriculture Pass-through Award Numbers: K2720, K3361, K3396 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended June 30, 2021, Coastal Harvest lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for cash management, reporting, and special tests and provisions. We have determined this to be a material weakness in internal control over compliance. Cause: Coastal Harvest had limited management and administrative staff during the year ended June 30, 2021. Further, as described in finding 2021-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture Assistance Listing Numbers: 10.565, 10.568, and 10.569 Federal Program Names: Food Distribution Cluster Pass-through Entity: Washington State Department of Agriculture Pass-through Award Number: K2764 Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.019 Federal Program Name: Coronavirus Relief Fund Pass-through Entity: Washington State Department of Agriculture Pass-through Award Numbers: K2720, K3361, K3396 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended June 30, 2021, Coastal Harvest lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for cash management, reporting, and special tests and provisions. We have determined this to be a material weakness in internal control over compliance. Cause: Coastal Harvest had limited management and administrative staff during the year ended June 30, 2021. Further, as described in finding 2021-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture Assistance Listing Numbers: 10.565, 10.568, and 10.569 Federal Program Names: Food Distribution Cluster Pass-through Entity: Washington State Department of Agriculture Pass-through Award Number: K2764 Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.019 Federal Program Name: Coronavirus Relief Fund Pass-through Entity: Washington State Department of Agriculture Pass-through Award Numbers: K2720, K3361, K3396 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended June 30, 2021, Coastal Harvest lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for cash management, reporting, and special tests and provisions. We have determined this to be a material weakness in internal control over compliance. Cause: Coastal Harvest had limited management and administrative staff during the year ended June 30, 2021. Further, as described in finding 2021-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture Assistance Listing Numbers: 10.565, 10.568, and 10.569 Federal Program Names: Food Distribution Cluster Pass-through Entity: Washington State Department of Agriculture Pass-through Award Number: K2764 Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.019 Federal Program Name: Coronavirus Relief Fund Pass-through Entity: Washington State Department of Agriculture Pass-through Award Numbers: K2720, K3361, K3396 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended June 30, 2021, Coastal Harvest lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for cash management, reporting, and special tests and provisions. We have determined this to be a material weakness in internal control over compliance. Cause: Coastal Harvest had limited management and administrative staff during the year ended June 30, 2021. Further, as described in finding 2021-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture Assistance Listing Numbers: 10.565, 10.568, and 10.569 Federal Program Names: Food Distribution Cluster Pass-through Entity: Washington State Department of Agriculture Pass-through Award Number: K2764 Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.019 Federal Program Name: Coronavirus Relief Fund Pass-through Entity: Washington State Department of Agriculture Pass-through Award Numbers: K2720, K3361, K3396 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended June 30, 2021, Coastal Harvest lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for cash management, reporting, and special tests and provisions. We have determined this to be a material weakness in internal control over compliance. Cause: Coastal Harvest had limited management and administrative staff during the year ended June 30, 2021. Further, as described in finding 2021-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture Assistance Listing Numbers: 10.565, 10.568, and 10.569 Federal Program Names: Food Distribution Cluster Pass-through Entity: Washington State Department of Agriculture Pass-through Award Number: K2764 Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.019 Federal Program Name: Coronavirus Relief Fund Pass-through Entity: Washington State Department of Agriculture Pass-through Award Numbers: K2720, K3361, K3396 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended June 30, 2021, Coastal Harvest lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for cash management, reporting, and special tests and provisions. We have determined this to be a material weakness in internal control over compliance. Cause: Coastal Harvest had limited management and administrative staff during the year ended June 30, 2021. Further, as described in finding 2021-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Agriculture Assistance Listing Numbers: 10.565, 10.568, and 10.569 Federal Program Names: Food Distribution Cluster Pass-through Entity: Washington State Department of Agriculture Pass-through Award Number: K2764 Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.019 Federal Program Name: Coronavirus Relief Fund Pass-through Entity: Washington State Department of Agriculture Pass-through Award Numbers: K2720, K3361, K3396 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended June 30, 2021, Coastal Harvest lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for cash management, reporting, and special tests and provisions. We have determined this to be a material weakness in internal control over compliance. Cause: Coastal Harvest had limited management and administrative staff during the year ended June 30, 2021. Further, as described in finding 2021-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.
Finding 2021-008 – Lack of Internal Controls Over Major Federal Program – Coronavirus Relief Fund PASS-THROUGH GRANTOR: 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 YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost 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 Delaware County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Period of Performance. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal grant requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement a system of internal control procedures to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials for discussion of all grants and federal monies that Delaware County receives to ensure that proper internal controls are implemented. Criteria: OMB 2 CFR 200, Subpart D. §_ .303(a) reads as follows: Subpart D-Post Federal Award Requirements §200.303 Internal Controls The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, 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.
2021-003 - Allowable Costs/Cost Principles Federal Program Information: ALN - 10.760 - Water and Waste Disposal Systems For Rural Communities Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoice’s and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds Identification of Questioned Costs: None identified. Context: The sample selection consisted of 5 out of 9 transactions. Of the 5 samples, 5 did not have consistent document approval of invoices and board approvals to ensure that only allowable costs were being charged to the program and 3 out of 5 invoices were paid over 30 days late. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Unit develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2021-005 – Allowable Costs/Cost Principles Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoice’s and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Lack of supervisory oversight. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds Identification of Questioned Costs: None identified. Context: The population selection consisted of 12 out of 16 transactions were examined. Of the 12 samples, 12 did not have management approval and 7 did not document board approvals to ensure that only allowable costs were being charged to the program and 8 out of 12 invoices were over 30 days late. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Unit develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2021-005 – Allowable Costs/Cost Principles Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoice’s and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Lack of supervisory oversight. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds Identification of Questioned Costs: None identified. Context: The population selection consisted of 12 out of 16 transactions were examined. Of the 12 samples, 12 did not have management approval and 7 did not document board approvals to ensure that only allowable costs were being charged to the program and 8 out of 12 invoices were over 30 days late. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Unit develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
Finding 2021-006 Payroll Documentation - Activities Allowed and Unallowed, Allowable Costs/Cost Principles – Noncompliance and Material Weakness in Internal Control over Compliance Agency Department of the Treasury ALN 21.019 Program COVID-19 - Coronavirus Relief Fund Award Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CRF-024 Criteria 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. 2 CFR 200.430 requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Per 2 CFR 200.430, these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and be incorporated into the official records of the non-Federal entity. Condition During our testing of payroll disbursements, we noted the following exceptions: - 20 out of the 60 expenditures sampled did not have properly maintained personnel action forms signed by the employee. - one out of the 60 expenditures sampled had an employee whose pay rate had decreased; however, no adjustment was made in the payroll system to reflect this decrease. Cause Internal controls were not in place throughout the entire fiscal year to ensure that all personnel action forms were reviewed and signed by the designated individuals and the payroll system is updated to reflect changes in pay rates. Effect or potential effect Federal funds could be expended for unallowed activities and unallowed costs. Questioned costs Below the reporting threshold. Context We tested a sample of 60 payroll transactions totaling to $148,729 from a population of 454 payroll transactions. The total amount of payroll expenditures charged to the program in fiscal year 2021 were $1,220,281. We noted 21 exceptions as noted in the condition. This is a condition identified per review of City's compliance with the specified requirements not using a statistically valid sample. Identification as a repeat finding This is a repeat finding from prior year. This was reported as finding 2020- 005 in the 2020 report. Recommendation Management should ensure the most current personnel action forms are reviewed and signed by the designated personnel. Views of responsible officials Management concurs with the finding. Management will review current employee pay rates within the payroll module and ensure the rates agree to the most current pay rate as specified in the employee’s current personnel action form.
Finding 2021-007 Late Reporting – Significant Deficiency in Internal Control Over Compliance Agency Environmental Protection Agency ALN 66.202 Program Congressionally Mandated Projects Award Year FY 2021 Pass-Through Agency State of Alaska Department of Environmental Conservation Pass-Through Entity Identifying Number(s) 18EQ57, 20ER77, 21ES93 Criteria 2 CFR 200.303, Internal Controls, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Condition During our testing of reporting, we noted two of the three reports tested were submitted after the due date. Cause The City’s internal controls over reporting are not designed appropriately to ensure timely reporting. Effect or potential effect Information submitted to granting agency may not be received in time. Questioned costs Not applicable. Context We tested a sample of three reports and found two exceptions as noted in the condition. The total population consisted of 11 reports. This is a condition identified per review of the City’s compliance with reporting requirements not using a statistically valid sample. Identification as a repeat finding Not a repeat finding. Recommendation Management should review report due dates and ensure that accurate reports are submitted before they are due. Views of responsible officials Management concurs with the finding. Management will carefully review report deadlines and ensure that submission of reports is made before they are due.
Finding 2021-012 Expenditure Approval - Activities Allowed and Unallowed, Allowable Costs – Material Weakness in Internal Control Over Compliance Agency Department of the Treasury ALN 21.019 Program COVID-19 - Coronavirus Relief Fund Award Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CRF-024 Criteria 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statues, regulations, and terms and conditions of the federal award. Condition During our testing of nonpayroll transactions, we noted the following exception: 17 out of 62 transactions sampled did not have documentation of approval by management. Cause Policies and procedures were not appropriately adhered to in certain instances to ensure that the appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or potential effect Federal funds could be expended for unallowed activities and unallowed costs. Questioned costs None. Context We tested a sample of 62 nonpayroll transactions totaling to $947,814 from a population of 470 transactions totaling to $2,768,962. We noted 17 exceptions as noted in the condition. This is a condition identified per review of the City’s compliance with the specified requirements not using a statistically valid sample. Identification as a repeat finding Not a repeat finding. Recommendation Management should review policy and ensure documentation supporting each expenditure, as well as of timely review and approval, will be retained. Views of responsible officials Management concurs with the finding. Management will implement policies and procedures to ensure expenditures are reviewed timely and approved prior to posting.
Finding 2021-013 Gift Cards - Activities Allowed or Unallowed; Allowable Costs/Cost Principles – Noncompliance and Material Weakness in Internal Controls Over Compliance Agency Department of the Treasury ALN 21.019 Program COVID-19 – Coronavirus Relief Fund Award Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number 20-CRF-024 Criteria 2 CFR 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. Condition During our testing of gift cards purchased by the City for distribution to individuals as an incentive for receiving the COVID-19 vaccine, we noted that the City did not maintain evidence of reconciling the gift card purchases to the gift cards distributed. Cause Policies and procedures were not appropriately adhered to in certain instances to ensure that reconciliation is done for gift card distributions. Effect or potential effect We were unable to confirm that all gift cards purchased using program funds were distributed only to eligible individuals per the City’s COVID-19 vaccination incentive program. Gift cards may have been distributed to individuals not meeting the City’s requirements for eligibility. Questioned costs None. Context The City used program funds to purchase $76,013 in gift cards for use as an incentive to encourage individuals to receive the COVID-19 vaccine. The City was not able to provide documentation that reconciled the gift cards purchases against distributions of gift cards. Identification as a repeat finding Not a repeat finding. Recommendation We recommend the City ensure its policies and procedure are followed on a consistent basis. Views of responsible officials Management concurs with the finding. Management will review current policies and will ensure that policies and procedures are adhered to ensure that proper reconciliations are done.
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.