Finding Text
Finding 2022-008 – Lack of Internal Controls Over Major Federal Programs – Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Repeat Finding 2017-014, 2018-005, 2020-007) 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, DR-4315, and DR-4575 FEDERAL AWARD YEAR: 2022 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions. 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 resulted in noncompliance with grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The County will include discussion of all required compliance requirements for each federal program presented in our Officers’ meetings. District 1 County Commissioner: There are numerous external controls associated with federal funding, including oversight from both state and federal agencies. Internally, we have encountered resistance from certain county officials who are less familiar with the scope and structure of large federal projects. This included a former official who repeatedly asserted that “$400,000.00 is missing,” despite being shown conclusively that no funds were missing. That official resigned shortly thereafter. Incidents of this nature have made it more difficult to engage in productive discussions regarding internal controls. Nonetheless, I remain willing to meet openly and discuss internal controls in a transparent and constructive manner. Auditor Response: Uniform Guidance and GAO Standards require internal controls to be designed and implemented for all federal grant expenditures. 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). 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.