Finding 2021-010 – Lack of Internal Controls Over Schedule of Expenditures of Federal Awards 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 – Reimbursement 2020; 4530-DR-OK 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 audit, we identified federal programs that were not listed accurately on the County’s Schedule of Expenditures of Federal Awards (SEFA). Federal expenditures were understated by $532,307. The following misstatements were noted: Expenditures: • The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $774,579, the County reported $241,966, which understated expenditures by $532,613. • The actual expenditures for Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027, were $2,437, the County reported $2,807, which overstated expenditures by $370. • The actual expenditures for FEMA – Public Assistance DR-4438, Disaster Grants – Public Assistance (Presidentially Declared Disasters), ALN 97.036, were $$60,394, the County reported $46,703, which understated expenditures by $13,691. • The actual expenditures of FEMA – Category B DR-4438 ALN 97.067 were $0, the County reported $8,342, which overstated expenditures by $8,342. • The actual expenditures for FEMA – Public Assistance OEM DR – 4453 ALN 97.036 were $0, the County reported $870, which overstated expenditures by $870. • The actual expenditures for COVID-19 FEMA-Public Assistance DR-4530, Disaster Grants – Public Assistance (Presidentially Declared Disasters), ALN 97.036, were $28,063, the County reported $21,047, which understated expenditures by $7,016. • The actual expenditures for Emergency Management Performance Grant, ALN 97.042, were $45,000, the County reported $56,250, which overstated expenditures by $11,250. • The actual expenditures for Fire Management Assistance Grand, ALN 97.046, were $0, the County reported $181, which overstated expenditures by $181. Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of expenditures for federal awards. Effect of Condition: These conditions resulted in the misstatement of the expenditures reported on the County’s SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Washington County. Internal control procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: District 1 County Commissioner: Not by way of excuse, but truly in response, the Federal programs associated with the COVID response were unnecessarily arduous and created confusion at all levels of government. While the monetary response was accepted, the premise of these programs was nothing more than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then “final interim” and finally, “final” (redundancy intentional). The intent of our national level leadership became more apparent as these programs progressed with each iteration of programming being reliant on returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of their planning with these programs, will be found as fully compliant. As these programs have a sunset in the near term, I suspect these findings will disappear. District 2 County Commissioner: I was not in office at this time; however, I will work with other elected officials, county officials and department heads to ensure there is an understanding of federal programs awarded to Washington County, and the use of internal control procedures designed and implemented to ensure accurate reporting of expenditures and revenues on the SEFA and to ensure compliance with federal requirements. District 3 County Commissioner: These programs are temporary and difficult to navigate through. I will continue to press staff to report effectively as possible and to be responsive to specific requests that are made. County Clerk: I will work with the other Elected Officials to gain a better understanding of federal programs that are awarded to our County. I will work with the other offices to implement internal controls to ensure accurate reporting on the SEFA. County Sheriff: I have and will continue to work toward compliance in these areas of SEFA. I will continue to work with the other elected officials to gain proper understanding of Federal Programs and Requirements. Criteria: Title 2 CFR 200 § 200.210(a)(b) Financial Statements reads as follows: (a) Financial statements. The auditee must prepare financial statements that reflect its financial position, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year audited. The financial statements must be for the same organizational unit and fiscal year that is chosen to meet the requirements of this part. However, non-Federal entity-wide financial statements may also include departments, agencies, and other organizational units that have separate audits in accordance with §200.514 Scope of audit, paragraph (a) and prepare separate financial statements. (b) 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 statement, which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. 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. [….] 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 standardsetting 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.
Finding 2021-011 – Lack of County-Wide Controls Over Major Federal Program – Coronavirus Relief Fund 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 – Reimbursement 2020; 4530-DR-OK; 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. The following deficiencies were noted: • The BOCC is aware there are compliance supplement requirements; however, they are not aware of the specifics of the requirements. There is no evidence the BOCC looked over submissions to ensure they were in compliance with federal guidance prior to submission to the awarding agency. • The County did start keeping a reconciliation of federal expenditures; however, it was not accurate with the expenditures submitted, and the County did not continue to update to include the Sheriff Office payroll. Additionally, there is no evidence of a BOCC review. • The risks of incorrect financial reporting, resulting from fraud or error for the SEFA are not addressed verbally or in written communication. • The County is relying on the Clerk and Treasurer to ensure the accuracy of the SEFA. Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County complies with grant requirements. Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in unrecorded transactions, undetected errors, misappropriation of funds, and noncompliance with federal grant requirements. Recommendation: OSAI recommends that the County implement a system of internal controls to ensure compliance with grant requirements. Management Response: District 1 County Commissioner: Not by way of excuse, but truly in response, the Federal programs associated with the COVID response were unnecessarily arduous and created confusion at all levels of government. While the monetary response was accepted, the premise of these programs was nothing more than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then “final interim” and finally, “final” (redundancy intentional). The intent of our national level leadership became more apparent as these programs progressed with each iteration of programming being reliant on returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of their planning with these programs, will be found as fully compliant. As these programs have a sunset in the near term, I suspect these findings will disappear. District 2 County Commissioner: I was not in office the year audited, but I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. District 3 County Commissioner: I will work with the other elected officials creating internal controls to ensure compliance with grant requirements. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews. Furthermore, 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Finding 2021-012 – Lack of Internal Controls Over Major Federal Program – Coronavirus Relief Fund 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 – Reimbursement 2020; 4530-DR-OK; 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 Washington 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. • Expenditures are not reviewed for Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance. • The County did not maintain an accurate and up to date reconciliation of expenditures in regard to the Coronavirus Relief Fund. • No internal controls were present to identify which costs were Allowable, and for the correct amounts for the Coronavirus Relief Fund. o The County submitted $948,512 in expenditures related to COVID-19 of which only $744,579 were obligated to be reimbursed. o The County submitted $14,606 in COVID-19 related PPE expenditures of which only $13,888 was awarded. • The County did not follow proper purchasing procedures; two (2) expenditures totaling $1,149 were not encumbered prior to the receipt of goods/services: Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal program expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition attributed to the noncompliance with grant requirements and could lead to the loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with all requirements. Management Response: District 1 County Commissioner: Not by way of excuse, but truly in response, the Federal programs associated with the COVID response were unnecessarily arduous and created confusion at all levels of government. While the monetary response was accepted, the premise of these programs was nothing more than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then “final Interim” and finally, “final” (redundancy intentional). The intent of our national level leadership became more apparent as these programs progressed with each iteration of programming being reliant on returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of their planning with these programs, will be found as fully compliant. As these programs have a sunset in the near term, I suspect these findings will disappear. District 2 County Commissioner: I was not in office the year audited but will work with the other elected officials to ensure the county gains an understanding of requirements for the program and implement internal control procedures to ensure compliance with all requirements. District 3 County Commissioner: As elected officials, we will implement internal controls to ensure compliance for this one-time type of grant. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Activities – The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system.
Finding 2021-006: Cash Management - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria In accordance with §200.305, Federal payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Center's drawdowns did not illustrate review and approval by management. Cause The Center did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected seven drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for these drawdowns. Identification of Repeat Finding Yes, see finding 2020-006. Recommendation The Center should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.
Finding 2021-006: Cash Management - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria In accordance with §200.305, Federal payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Center's drawdowns did not illustrate review and approval by management. Cause The Center did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected seven drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for these drawdowns. Identification of Repeat Finding Yes, see finding 2020-006. Recommendation The Center should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.
Finding 2021-006: Cash Management - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria In accordance with §200.305, Federal payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Center's drawdowns did not illustrate review and approval by management. Cause The Center did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected seven drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for these drawdowns. Identification of Repeat Finding Yes, see finding 2020-006. Recommendation The Center should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.
Finding 2021-006: Cash Management - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria In accordance with §200.305, Federal payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Center's drawdowns did not illustrate review and approval by management. Cause The Center did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected seven drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for these drawdowns. Identification of Repeat Finding Yes, see finding 2020-006. Recommendation The Center should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.
Finding 2021-006: Cash Management - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria In accordance with §200.305, Federal payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Center's drawdowns did not illustrate review and approval by management. Cause The Center did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected seven drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for these drawdowns. Identification of Repeat Finding Yes, see finding 2020-006. Recommendation The Center should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.
Finding 2021-006: Cash Management - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria In accordance with §200.305, Federal payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Center's drawdowns did not illustrate review and approval by management. Cause The Center did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected seven drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for these drawdowns. Identification of Repeat Finding Yes, see finding 2020-006. Recommendation The Center should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.
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 YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the SEFA, as initially prepared by the County, we identified federal programs that were not reported accurately. These errors resulted in expenditures being understated by $3,828,046. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of expenditures on the SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the BOCC conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the BOCC and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The BOCC is responsible for preparing the financial statements. See OKLA. STAT. Title 68, § 3002(A). At the end of fiscal year 2020, the BOCC chose not to renew the contract with the budget maker. Beginning in fiscal year 2021, the BOCC and the Rogers County Treasurer developed and implemented a plan for the preparation and presentation of the financial statements by the Rogers County Treasurer beginning in fiscal year 2021. The purpose of this plan was to increase communication, involvement and oversight regarding the County’s financial condition and for better accuracy and timeliness of the preparation and presentation of the financial statements. The BOCC, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of county funds, will evaluate the processes and procedures currently in place to detect and identify material misstatements in Rogers County’s financial statements, detect fraud, and identify and address risks related to Rogers County’s financial reporting. Where deficiencies are identified, processes and procedures will be implemented to identify fraud, detect material misstatements in the financial statements, and address risks related to financial reporting. County Clerk: The County Clerk works with the BOCC and all elected officials to develop and implement policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. These policies are intended to ensure the accuracy of the County’s financial statements, Estimate of Needs, SEFA, and compliance with all applicable federal and state laws, regulations, and/or codes. The County Clerk will continue to perform the duties of her office in accordance with Oklahoma law. Where appropriate, the County Clerk will participate in the development and implementation of policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. County Treasurer: The County Treasurer was engaged to compile the SEFA report. Each department is responsible for reporting its own Federal revenues and expenditures. County Sheriff: The County Sheriff will work with the BOCC and all elected officials to develop and implement policies and procedures to ensure Rogers County’s SEFA is prepared timely and accurately. Criteria: 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. 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.
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 YEAR: 2021 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 complies with grant requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds. Recommendation: OSAI recommends that the County design and implement a system of internal controls to ensure compliance with grant requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews. Furthermore, 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office 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/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 Rogers 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: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. 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 and Oklahoma Office and Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING NO: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $731,856 Condition: The County submitted and received reimbursement for $4,244,344 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $731,856 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 $630,738 for payroll expenditures for the Northeast Oklahoma Enhanced 9-1-1 Trust Authority 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 $63,000 for the October 2020 payment to the Tulsa Port of Catoosa (the Port) for proposed project costs of the Port. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $24,620 for the September 2020 payment to the Rogers County Youth Services for estimated COVID related expenses of Rogers County Youth Services. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $7,821 for the September 2020 payment to the City of Claremore for advertising expenses of the City of Claremore. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $5,455 for duplicate expenses submitted between August 2020 and October 2020. • The County was reimbursed $650 for office supplies and equipment purchased in August 2020 when actual cost of the supplies and equipment was $428 causing the County to be reimbursed $222 more than allowed. • 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, this 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: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. The BOCC engaged a third party to assist in program evaluation, determination of eligible costs, subrecipient oversight and tracking, and grant documentation and reporting. Based on the third party’s qualifications and experience, the BOCC relied upon the experience and expertise of the third party to oversee COVID-19 funds. Further, with respect to submissions to the Oklahoma Office of Management and Enterprise Services (OMES), the BOCC relied on OMES to ensure that expenses submitted for reimbursement were eligible expenses. Criteria: 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 YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the SEFA, as initially prepared by the County, we identified federal programs that were not reported accurately. These errors resulted in expenditures being understated by $3,828,046. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of expenditures on the SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the BOCC conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the BOCC and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The BOCC is responsible for preparing the financial statements. See OKLA. STAT. Title 68, § 3002(A). At the end of fiscal year 2020, the BOCC chose not to renew the contract with the budget maker. Beginning in fiscal year 2021, the BOCC and the Rogers County Treasurer developed and implemented a plan for the preparation and presentation of the financial statements by the Rogers County Treasurer beginning in fiscal year 2021. The purpose of this plan was to increase communication, involvement and oversight regarding the County’s financial condition and for better accuracy and timeliness of the preparation and presentation of the financial statements. The BOCC, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of county funds, will evaluate the processes and procedures currently in place to detect and identify material misstatements in Rogers County’s financial statements, detect fraud, and identify and address risks related to Rogers County’s financial reporting. Where deficiencies are identified, processes and procedures will be implemented to identify fraud, detect material misstatements in the financial statements, and address risks related to financial reporting. County Clerk: The County Clerk works with the BOCC and all elected officials to develop and implement policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. These policies are intended to ensure the accuracy of the County’s financial statements, Estimate of Needs, SEFA, and compliance with all applicable federal and state laws, regulations, and/or codes. The County Clerk will continue to perform the duties of her office in accordance with Oklahoma law. Where appropriate, the County Clerk will participate in the development and implementation of policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. County Treasurer: The County Treasurer was engaged to compile the SEFA report. Each department is responsible for reporting its own Federal revenues and expenditures. County Sheriff: The County Sheriff will work with the BOCC and all elected officials to develop and implement policies and procedures to ensure Rogers County’s SEFA is prepared timely and accurately. Criteria: 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. 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.
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 YEAR: 2021 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 complies with grant requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and loss of federal funds. Recommendation: OSAI recommends that the County design and implement a system of internal controls to ensure compliance with grant requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews. Furthermore, 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office 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/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 Rogers 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: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. 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 and Oklahoma Office and Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING NO: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $731,856 Condition: The County submitted and received reimbursement for $4,244,344 in expenditures related to the COVID-19 Pandemic. After performing testwork on 100% of the County’s expenditures, $731,856 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 $630,738 for payroll expenditures for the Northeast Oklahoma Enhanced 9-1-1 Trust Authority 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 $63,000 for the October 2020 payment to the Tulsa Port of Catoosa (the Port) for proposed project costs of the Port. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $24,620 for the September 2020 payment to the Rogers County Youth Services for estimated COVID related expenses of Rogers County Youth Services. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $7,821 for the September 2020 payment to the City of Claremore for advertising expenses of the City of Claremore. The reimbursement of these funds was determined to be unallowable, as this cost was not an allowable cost of Rogers County. • The County was reimbursed $5,455 for duplicate expenses submitted between August 2020 and October 2020. • The County was reimbursed $650 for office supplies and equipment purchased in August 2020 when actual cost of the supplies and equipment was $428 causing the County to be reimbursed $222 more than allowed. • 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, this 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: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The BOCC will work with all elected officials and with the state and local partners in each federal award to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. The BOCC engaged a third party to assist in program evaluation, determination of eligible costs, subrecipient oversight and tracking, and grant documentation and reporting. Based on the third party’s qualifications and experience, the BOCC relied upon the experience and expertise of the third party to oversee COVID-19 funds. Further, with respect to submissions to the Oklahoma Office of Management and Enterprise Services (OMES), the BOCC relied on OMES to ensure that expenses submitted for reimbursement were eligible expenses. Criteria: 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.
Department of Health and Human Services Federal Assistance Listing/CFDA #93.498 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #870212456 Activities Allowed or Unallowed and Allowable Cost/Cost Principles Significant Deficiency in Internal Control Over Compliance and Noncompliance Not Considered Material Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The District claimed and reported expenditures that contained errors based upon the underlying documentation. Additionally, the District did not have internal controls in place to review and approve allowable expenditures separate from the preparer. Cause: The District had multiple individuals identifying and compiling eligible costs, however, the District did not have an internal control process in place to ensure a secondary review and approval of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing. The summary spreadsheet was used to claim allowable costs under the federal program. Additionally, not all supporting documentation was retained. Effect: There is a potential that costs may be claimed and reported are not allowable or amounts claimed may not be supported during a subsequent examination. Questioned Costs: None reported. Context: A nonstatistical sample of 60 supplies, services, and payroll transactions out of a population of approximately 1,476 totaling $3,100,530 were selected for testing. The sample contained errors in two transactions in which the amounts claimed on the Period 1 report were not supported by invoices. The amounts claimed not supported by invoices totaled $2,097 out of a total sample value of $2,021,539. Repeat Finding from Prior Years: No Recommendation: We recommend the District modify internal control policies to ensure amounts claimed for this program agree to underlying documentation and to ensure the records are retained to support the amounts. Views of Responsible Officials: Management agrees with the finding.
Finding 2021-004 – Internal Controls and Noncompliance Over the Schedule of Expenditures of Federal Awards (SEFA) PASS THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of the 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; Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the Schedule of Expenditures of Federal Awards (SEFA) as initially prepared by the County, we identified federal programs that were not listed accurately which resulted in federal expenditures being understated by $180,089. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of the federal expenditures on the SEFA. This condition could result in the failure to identify Single Audit requirements. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Choctaw County. Internal control policies and procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: We will adopt procedures and implement to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. County Clerk: We will pay more attention to what is being put on SEFA schedule. County Treasurer: I will do my part in correcting this issue to make sure that all qualifying expenditures are reported accurately in the future. 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. Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System - Objectives of an Entity - OV2.23 states in part: Compliance Objective 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 2021-005 – 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 the Treasury ASSISTANCE LISTING NO: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles, Period of Performance QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements for Coronavirus Relief fund, we noted that Choctaw 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 compliance requirements. 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 these programs and implement internal control policies and procedures to ensure compliance with requirements. Management Response: Chairman Board of County Commissioners: We will implement control procedures to ensure compliance with requirements. County Clerk: We will watch our adherence to federal requirements closer. County Treasurer: I will assist in implementing internal controls procedures to ensure compliance. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Controls – OV1.01 states in Dpeafritn: ition of Internal Controls Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Finding 2021-006 – Noncompliance Over Major Federal Program – Activities Allowed or Unallowed and Allowable Costs/Cost Principles-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 NUMBER: SA-0161 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed and Allowable Costs/Cost Principles QUESTIONED COSTS: $59,595 Condition: After performing expenditure testwork on 100% of the program, disbursements totaling $59,595 were not expended in accordance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements due to unsubstantiated and ineligible costs. We noted the following: • Reimbursed payroll expenditures totaling $51,552 were previously reimbursed by another entity. • Reimbursed payroll expenditures totaling $7,075 were previously reimbursed by another federal grant. • One employee’s salary totaling $569 was submitted and paid twice on two reimbursement requests. • Expenditures totaling $399 were unaccounted for and were not supported by adequate documentation to determine costs were incurred for allowable cost/cost principles. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with federal award requirements. Effect of Condition: These conditions resulted in noncompliance with grant requirements. The County runs the risk of misappropriation of funds which could hinder the County from receiving future federal funding. Further, this condition could result in the repayment of funds. Recommendation: OSAI recommends the County design and implement policies and procedures to ensure compliance with applicable grant requirements. Management Response: Chairman of the Board of County Commissioners: We will implement policies and procedures to ensure compliance with applicable grant requirements. County Clerk: We will watch closer ensure compliance with applicable grant requirements. County Treasurer: I will do my part to assist in the design and implementation of policies and procedures to ensure compliance with 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). Additionally, 2 CFR § 200.403 - Factors affecting allowability costs states in part, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented.” The Department of the Treasury Federal Register, Vol. 86, No. 10 states in part, “Fund payments may not be used for expenses that have been or will be reimbursed by another federal program.” Additionally, guidance provided in the Subrecipient Agreement - Federal Funding Certification executed 6/04/2020 between Choctaw County and the State of Oklahoma states in part, 5. Funds provided as a direct payment from the State of Oklahoma pursuant to this certification must adhere to official federal guidance issued or to be issued on what constitutes a necessary expenditure. Any funds expended by a political subdivision or its grantee(s) in any manner that does not adhere to official federal guidance or in violation of this certification shall be returned to the State of Oklahoma Coronavirus Relief Fund. 6. Any local government entity receiving funds pursuant to this certification shall retain documentation of all uses of the funds… 10. I acknowledge and certify that Recipient has not received, and will not apply for, federal funds from any other source, to reimburse it for the expenditures for which funds are sought pursuant hereto.
2021-009 Inability to Test Compliance (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Title I Assistance Listing Number: 84.010 Passed-through Identification: 20210848 Compliance Requirements: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.334, recipients of federal funds must retain financial and programmatic records, supporting documents, statistical records, and all other records pertinent to a federal award for a period of three years from the date of submission of the final expenditure report. Additionally, per 2 CFR 200.303, recipients must establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Condition: The School District informed the engagement team that it was unable to locate all required documentation necessary to support expenditures and compliance with federal program requirements. This affected our ability to complete the required testing over the major program. Cause: The School District does not have a consistent or centralized process for retaining and organizing documentation related to federal program expenditures and compliance requirements. Staff turnover and lack of clear documentation procedures contributed to the unavailability of records. Effect: Due to the absence of required supporting documentation, we were unable to obtain sufficient appropriate audit evidence to support compliance with the federal requirements for the affected programs. As a result, we were unable to determine whether certain transactions were allowable and in compliance with the applicable grant requirements. This represents a material noncompliance with federal regulations and may result in questioned costs or other remedial actions by the granting agency. Questioned Costs: $989,166. This amount represents the total presented on the Schedule of Expenditures of Federal Awards. The entire amount is in question because no testing could be performed as required documentation was not retained by the School District. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement stronger internal controls over document retention, including centralized digital storage systems, regular staff training on federal documentation requirements, and written procedures outlining retention responsibilities. These procedures should ensure that all required documentation is maintained and readily accessible for audit and monitoring purposes. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2021-010 Inability to Test Compliance (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D Passed-through Identification: 20204986 & 20211886 Compliance Requirements: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.334, recipients of federal funds must retain financial and programmatic records, supporting documents, statistical records, and all other records pertinent to a federal award for a period of three years from the date of submission of the final expenditure report. Additionally, per 2 CFR 200.303, recipients must establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Condition: The School District informed the engagement team that it was unable to locate all required documentation necessary to support expenditures and compliance with federal program requirements. This affected our ability to complete the required testing over the major program. Cause: The School District does not have a consistent or centralized process for retaining and organizing documentation related to federal program expenditures and compliance requirements. Staff turnover and lack of clear documentation procedures contributed to the unavailability of records. Effect: Due to the absence of required supporting documentation, we were unable to obtain sufficient appropriate audit evidence to support compliance with the federal requirements for the affected programs. As a result, we were unable to determine whether certain transactions were allowable and in compliance with the applicable grant requirements. This represents a material noncompliance with federal regulations and may result in questioned costs or other remedial actions by the granting agency. Questioned Costs: $505,347. This amount represents the total presented on the Schedule of Expenditures of Federal Awards. The entire amount is in question because no testing could be performed as required documentation was not retained by the School District. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement stronger internal controls over document retention, including centralized digital storage systems, regular staff training on federal documentation requirements, and written procedures outlining retention responsibilities. These procedures should ensure that all required documentation is maintained and readily accessible for audit and monitoring purposes. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2021-010 Inability to Test Compliance (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D Passed-through Identification: 20204986 & 20211886 Compliance Requirements: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.334, recipients of federal funds must retain financial and programmatic records, supporting documents, statistical records, and all other records pertinent to a federal award for a period of three years from the date of submission of the final expenditure report. Additionally, per 2 CFR 200.303, recipients must establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Condition: The School District informed the engagement team that it was unable to locate all required documentation necessary to support expenditures and compliance with federal program requirements. This affected our ability to complete the required testing over the major program. Cause: The School District does not have a consistent or centralized process for retaining and organizing documentation related to federal program expenditures and compliance requirements. Staff turnover and lack of clear documentation procedures contributed to the unavailability of records. Effect: Due to the absence of required supporting documentation, we were unable to obtain sufficient appropriate audit evidence to support compliance with the federal requirements for the affected programs. As a result, we were unable to determine whether certain transactions were allowable and in compliance with the applicable grant requirements. This represents a material noncompliance with federal regulations and may result in questioned costs or other remedial actions by the granting agency. Questioned Costs: $505,347. This amount represents the total presented on the Schedule of Expenditures of Federal Awards. The entire amount is in question because no testing could be performed as required documentation was not retained by the School District. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement stronger internal controls over document retention, including centralized digital storage systems, regular staff training on federal documentation requirements, and written procedures outlining retention responsibilities. These procedures should ensure that all required documentation is maintained and readily accessible for audit and monitoring purposes. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Department of Health and Human Services Federal Assistance Listing #93.498 COVID-19: Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 TIN #770637498 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Health System reported expenses based on specifically identified COVID related expenses. Condition: The Health System failed to provide an expense listing that supported the expenses included within the HHS Special Report – Period 1 (Report). In addition, the Health System’s lost revenue report did not reconcile to the Report and there was no evidence of review by someone other than the preparer. Cause: Internal controls in place did not ensure that all federal awards were supported and tracked appropriately. Effect: The lack of adequate policies governing review of the terms and conditions of the program, and lack of review over Report preparation and submission increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. The Health System submitted the Report without an accurate schedule to support the amount of expenses claimed. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Years: No Recommendation: We recommend that the Health System enhance internal control policies to ensure all amounts reported and submitted to the federal agency are adequately documented and supported We also recommend that the Health System enhance internal control policies to ensure that the required reports are properly reviewed prior to submission to ensure all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.
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”.