PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services
FEDERAL AGENCY: U.S. Department of Treasury
ASSISTANCE LISTING: 21.019
FEDERAL PROGRAM NAME: Coronavirus Relief Fund
FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242
FEDERAL AWARD YEAR: 2020
CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance
QUESTIONED COSTS: $-0-
Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736.
The following misstatements were noted:
• The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304.
• The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226.
• The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227.
• The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183.
Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230.
Furthermore, the County did not prepare Notes to the SEFA.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required.
Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA.
Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements.
Management Response:
District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations.
District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI.
District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements.
County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA.
County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy.
County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared.
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 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. [….]
2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…”
Additionally, 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.
Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states:
Definitions of Objectives
Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.