Finding Text
Finding 2020-005 – Lack of Internal Controls and Noncompliance 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 YEAR: 2019 FEDERAL AWARD NUMBER: DR-4315 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; Period of Performance; Reporting; and Special Tests and Provisions QUESTIONED COSTS: $243,489 Condition: Upon inquiry of county personnel, the following Project Worksheets (PW) for DR-4315 and any supporting documentation of expenditures could not be located for District 1 totaling $243,489: • PW 178 (site 1) in the amount of $27,566. • PW 185 (all sites) in the amount of $48,785. • PW 192 (all sites) in the amount of $76,276. • PW 193 (all sites) in the amount of $90,862. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal grant requirements and to ensure that the supporting documentation is maintained and readily available. Effect of Condition: These conditions resulted in noncompliance with grant requirements and could result in loss of federal funds. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure compliance with grant requirements and to ensure that documentation of federal expenditures is maintained and readily available. Management Response: District 1 County Commissioner: Auditors initially indicated that documentation was required for FEMA Event 4315 only. Subsequently, the scope of the request was expanded to include “all events” without a clear written explanation or formal notification of the expanded scope. Following an on-site visit to the county barn for a tabletop discussion, the auditor sent an email dated May 11, 2023, identifying specific projects for which documentation was reportedly still needed. The projects later cited in Audit Finding 2020-005 were not included in that list. On June 12, 2023, the auditor emailed stating: “I believe I have documents for every project except 4575.203.454750 and 4575.203.454831 (Disaster. Project Worksheet.Site).” The requested documentation was provided promptly, and the auditor acknowledged receipt. The auditor subsequently sent several clarifying questions and, in a final email dated June 20, 2023, stated that he would consult with his team and follow up as needed. No further communication was received from the auditor or any member of the auditor’s office requesting additional documentation. Nearly three years have elapsed without follow-up. The County does have documentation for all projects listed in the audit finding and these records were provided to auditors during their on-site visits to the county barn. Auditor Response: Supporting documentation could not be provided to the auditors when requested and has not been provided to date. Uniform Guidance and GAO Standards require internal controls to be designed and implemented, as well as maintaining supporting documentation for all federal grant expenditures. District 2 County Commissioner: I am aware of the audit findings involving FEMA Disaster 4315. I apologize for the delayed response letter. On behalf of Dewey County District 2, we want to assure you we are here to help and assist you with anything you or your office may need from myself, or from any District 2 employee. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Controls Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. 2 CFR § 200.303(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 § 200.318(a), General procurement standards, reads as follows: The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in 200.317 through 200.327. 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. […]