Finding 554491 (2021-012)

Finding 2021-012 – Lack of Internal Controls Over Major Federal Program – Coronavirus Relief Fund 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 the process of documenting the County’s internal controls regarding federal disbursements, we noted that Washington County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance. • Expenditures are not reviewed for Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance. • The County did not maintain an accurate and up to date reconciliation of expenditures in regard to the Coronavirus Relief Fund. • No internal controls were present to identify which costs were Allowable, and for the correct amounts for the Coronavirus Relief Fund. o The County submitted $948,512 in expenditures related to COVID-19 of which only $744,579 were obligated to be reimbursed. o The County submitted $14,606 in COVID-19 related PPE expenditures of which only $13,888 was awarded. • The County did not follow proper purchasing procedures; two (2) expenditures totaling $1,149 were not encumbered prior to the receipt of goods/services: Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal program expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition attributed to the noncompliance with grant requirements and could lead to the loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with all 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 the year audited but will work with the other elected officials to ensure the county gains an understanding of requirements for the program and implement internal control procedures to ensure compliance with all requirements. District 3 County Commissioner: As elected officials, we will implement internal controls to ensure compliance for this one-time type of grant. 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). The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Activities – The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system.