Finding Text
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Lincoln County has not established procedures to ensure compliance with the following compliance requirements: Procurement and Suspension and Debarment, 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 loss of federal funds to the County. Recommendation: OSAI recommends the County implement a system of internal controls to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: As Chairman of the Board of County Commissioners, I am submitting the Board’s response to the federal compliance findings identified in the audit report. The Board acknowledges the recommendation to formalize internal control documentation consistent with GAO Green Book standards. While internal controls have been operationally in practice, documentation has not been consolidated into a single formally adopted policy reflecting the federal framework language referenced in the audit. • A comprehensive written internal control policy will be drafted aligning with GAO Green Book principles. • The policy will incorporate revenue, disbursement, purchasing, monitoring, and documentation controls. • The policy will be reviewed by legal counsel prior to formal adoption. • An annual review process will be implemented to ensure continued compliance with federal standards. • Prior to initiation of any federally funded project, relevant county personnel will be formally briefed on applicable federal requirements. • Upon completion of federally funded projects, an internal review will be conducted to verify that required documentation is complete and that applicable regulations were followed. No questioned costs were identified in connection with these findings. County Clerk: Policies and procedures for federal programs will be included in the employee handbook. Each office will communicate with the County Clerk and Treasurer when federal funds have been awarded to ensure proper procedures are followed. County Treasurer: The Treasurer will work with the other County Officials on gaining a better understanding of requirements for this program and will work on implementing policies and procedures to ensure compliance with grant requirements. 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: (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).