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Finding 2024-002: Person Responsible: County Auditor Anticipated Completion Date: November 30, 2025 Assistance Listing Numbers: 21.027 – Coronavirus State and Local Fiscal Recovery Funds (ARPA) Federal Agency: U.S. Department of the Treasury Pass-through Entity: N/A Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Compliance Requirement: Special Tests and Provisions Questioned Costs: None Criteria: Management is responsible for establishing and maintaining effective and timely internal controls along with policies and procedures that allow the County to present timely and accurate financial information. Condition and Context: The County was not able to produce the September 30, 2024 schedule of expenditures of federal and state awards a in timely manner. The County’s September 30, 2024, schedule of expenditures of federal and state awards was presented on October 3, 2025, which was past the nine-month single audit and Federal Audit Clearinghouse deadlines. The County was also recording a due from other governments receivable and unearned revenue each time they were awarded or renewed a grant. Cause: The reason for the delayed release of the September 30, 2024 schedule of expenditures of federal and state awards was a combination of issues. First, the County implemented a new accounting software with the September 30, 2024 fiscal year being the first-year accounting and reporting with the new software. New software presents numerous challenges with the normal processes of accounting and reporting. There were issues with getting previous balance and information transferred from the previous system which led to delays in getting the County’s accounting records up to date. There were also delays caused by new account number groupings aligned with the new cost center reporting. The County also experienced management turnover in key accounting and reporting roles. The previous County Auditor who had been with the County for several years left the County. There were then two more interim personnel before a final interim was put in place to assist with getting the September 30, 2024 financial statements completed and issued. Effect or Potential Effect: With the change in accounting software and numerous personnel changes, the process of getting accurate and timely financials completed was difficult. These two issues were the driving factor that caused the late issuance of the September 30, 2024 schedule of expenditures of federal and state awards. These also caused the County’s financial statements to have overstated balances in due from other government receivables and unearned revenues. Recommendation: These issues are difficult to deal with at any entity that faces them. This combination of accounting software changes and change in personnel happening at the same time is very rare. However, County management should continue to work and manage these issues when presented to them. The communication from the County Auditor’s office to the Commissioners Court was not detailed or frequent enough to keep the Court aware of where the County was in terms of the software conversion. When a County Auditor is selected, there should be a continued effort to enhance communication with that office and the rest of the County. Management’s Response: Management acknowledges that there have been challenges with the preparation of the September 30, 2024 financial statements due mainly to the implementation of a new accounting system in January 2024. Three months’ data was recorded in the legacy software system with nine months in the new system. Additionally, implementation of data from the old system to the new system did not mirror each other due to prior management decisions that were made, and so a software consultant was hired to convert all the newly converted data into the old, legacy format. This created duplicate journal entries that took time to identify and correct. These issues have since been resolved. Closing of future fiscal years should not encounter these same challenges. There were additional challenges with the recording of grants. In fiscal year 2024, management of grants had been mainly decentralized. There was a grants department who was responsible for some grants; a grants position in the County Auditor’s office who was responsible for other grants; and the management of even other grants being outsourced to an outside consultant. The Commissioners Court recognized the issues that this caused, and for fiscal year 2026, the grants department has been disbanded. The function of that department will be centralized with the outside consultant – with management oversight by a county employee. The financial recording will be centralized in the County Auditor’s office by an accountant who will be adequately trained in the accounting for grants. The position is currently being advertised, with a hire date of no later than November 30, 2025 being anticipated.