Finding 2021-010 – Lack of Internal Controls Over Schedule of Expenditures of Federal Awards
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 – Reimbursement 2020; 4530-DR-OK 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 audit, we identified federal programs that were not listed accurately on the County’s
Schedule of Expenditures of Federal Awards (SEFA). Federal expenditures were understated by $532,307.
The following misstatements were noted:
Expenditures:
• The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $774,579, the County
reported $241,966, which understated expenditures by $532,613.
• The actual expenditures for Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027, were
$2,437, the County reported $2,807, which overstated expenditures by $370.
• The actual expenditures for FEMA – Public Assistance DR-4438, Disaster Grants – Public
Assistance (Presidentially Declared Disasters), ALN 97.036, were $$60,394, the County reported
$46,703, which understated expenditures by $13,691.
• The actual expenditures of FEMA – Category B DR-4438 ALN 97.067 were $0, the County reported
$8,342, which overstated expenditures by $8,342.
• The actual expenditures for FEMA – Public Assistance OEM DR – 4453 ALN 97.036 were $0, the
County reported $870, which overstated expenditures by $870.
• The actual expenditures for COVID-19 FEMA-Public Assistance DR-4530, Disaster Grants – Public
Assistance (Presidentially Declared Disasters), ALN 97.036, were $28,063, the County reported
$21,047, which understated expenditures by $7,016.
• The actual expenditures for Emergency Management Performance Grant, ALN 97.042, were
$45,000, the County reported $56,250, which overstated expenditures by $11,250.
• The actual expenditures for Fire Management Assistance Grand, ALN 97.046, were $0, the County
reported $181, which overstated expenditures by $181.
Cause of Condition: Policies and procedures have not been designed and implemented to ensure an
accurate reporting of expenditures for federal awards.
Effect of Condition: These conditions resulted in the misstatement of the expenditures reported on the
County’s SEFA and could increase the potential for material noncompliance.
Recommendation: OSAI recommends county officials and department heads gain an understanding of
federal programs awarded to Washington 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:
District 1 County Commissioner: Not by way of excuse, but truly in response, the Federal programs
associated with the COVID response were unnecessarily arduous and created confusion at all levels of
government. While the monetary response was accepted, the premise of these programs was nothing more
than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then
“final interim” and finally, “final” (redundancy intentional). The intent of our national level leadership
became more apparent as these programs progressed with each iteration of programming being reliant on
returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of
their planning with these programs, will be found as fully compliant. As these programs have a sunset in
the near term, I suspect these findings will disappear.
District 2 County Commissioner: I was not in office at this time; however, I will work with other elected
officials, county officials and department heads to ensure there is an understanding of federal programs
awarded to Washington County, and the use of internal control procedures designed and implemented to
ensure accurate reporting of expenditures and revenues on the SEFA and to ensure compliance with federal
requirements.
District 3 County Commissioner: These programs are temporary and difficult to navigate through. I will
continue to press staff to report effectively as possible and to be responsive to specific requests that are
made.
County Clerk: I will work with the other Elected Officials to gain a better understanding of federal
programs that are awarded to our County. I will work with the other offices to implement internal controls
to ensure accurate reporting on the SEFA.
County Sheriff: I have and will continue to work toward compliance in these areas of SEFA. I will continue
to work with the other elected officials to gain proper understanding of Federal Programs and Requirements.
Criteria: Title 2 CFR 200 § 200.210(a)(b) Financial Statements reads as follows: (a) Financial
statements. The auditee must prepare financial statements that reflect its financial position,
results of operations or changes in net assets, and where appropriate, cash flows for the fiscal
year audited. The financial statements must be for the same organizational unit and fiscal
year that is chosen to meet the requirements of this part. However, non-Federal entity-wide
financial statements may also include departments, agencies, and other organizational units
that have separate audits in accordance with §200.514 Scope of audit, paragraph (a) and
prepare separate financial statements. (b) 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 statement, which must include the total Federal awards
expended as determined in accordance with §200.502 Basis for determining Federal awards
expended.
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. [….]
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 standardsetting
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.