Finding Text
Finding 2021-006 – Lack of Internal Controls Over the Schedule of Expenditures of Federal Awards (SEFA)
Condition: Total federal expenditures on the SEFA were understated by $375,034:
• Expenditures reported on the SEFA for ALN 97.036 Disaster Grant – Public Assistance were $467,323. Actual federal expenditures obtained from the County’s records confirm $838,525 expended for an overstated variance of $371,202.
• Expenditures reported on the SEFA for ALN 15.226 OMES/E911 GIS Tracking were $0. Actual federal expenditures obtained from the County’s records confirm $3,832 expended for an understated variance of $3,832.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures on the SEFA.
Effect of Condition: This condition resulted in erroneous reporting and a material misstatement of the County’s SEFA and could result in material noncompliance.
Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Grant County. Internal control procedures should be designed and implemented to ensure accurate and timely reporting of expenditures on the SEFA and to ensure compliance with federal requirements.
Management Response:
County Commissioner District 1: We will discuss the SEFA completion in County Officers’ meeting. I will search for resources to aid in the completion of the SEFA.
County Commissioner District 2: I will educate myself and do everything possible to become familiar with the requirements of the SEFA.
County Commissioner District 3: We will address this issue as a County in the officers’ meetings.
County Clerk: We have increased our understanding of the reporting requirement of the SEFA.
Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
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 Objective
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.