Finding Text
Finding 2025-006 – Lack of Internal Controls and Noncompliance Over the Schedule of Expenditures of Federal Awards PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2024 and 2025 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; and Reporting 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 reported accurately resulting in federal expenditures being overstated by $180,422. Cause of Condition: The County has not designed and implemented formal internal controls for the reporting of its federal programs as required by federal regulations. Effect of Condition: This condition resulted in the material misstatement of the County’s SEFA. Recommendation: OSAI recommends the County Officials and Department Heads gain an understanding of federal programs awarded to McCurtain 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: Chairman Board of County Commissioners: The current Board of County Commissioners acknowledges the finding. The Board is committed to improving the identification, tracking, and reporting of federal awards. County officials will continue working with auditors and department heads to strengthen reconciliation and review procedures and ensure federal activity is accurately reported on the Schedule of Expenditures of Federal Awards. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office will continue maintaining accurate accounting records of federal receipts and expenditures and will cooperate with county officials and auditors during the preparation of the Schedule of Expenditures of Federal Awards. Additional review and reconciliation procedures will be encouraged to improve the accuracy of federal reporting.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, in part, 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 – 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.