Finding 565788 (2021-008)

Material Weakness Repeat Finding
Requirement
ABH
Questioned Costs
-
Year
2021
Accepted
2025-06-23

AI Summary

  • Core Issue: The County inaccurately reported federal program expenditures, leading to an understatement of $3,828,046 on the SEFA.
  • Impacted Requirements: Lack of effective internal controls and procedures resulted in potential noncompliance with federal regulations.
  • Recommended Follow-Up: County officials should enhance understanding of federal programs and implement robust internal controls to ensure accurate reporting and compliance.

Finding Text

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 YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the SEFA, as initially prepared by the County, we identified federal programs that were not reported accurately. These errors resulted in expenditures being understated by $3,828,046. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of expenditures on the 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 Rogers County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the BOCC conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the BOCC and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The BOCC is responsible for preparing the financial statements. See OKLA. STAT. Title 68, § 3002(A). At the end of fiscal year 2020, the BOCC chose not to renew the contract with the budget maker. Beginning in fiscal year 2021, the BOCC and the Rogers County Treasurer developed and implemented a plan for the preparation and presentation of the financial statements by the Rogers County Treasurer beginning in fiscal year 2021. The purpose of this plan was to increase communication, involvement and oversight regarding the County’s financial condition and for better accuracy and timeliness of the preparation and presentation of the financial statements. The BOCC, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of county funds, will evaluate the processes and procedures currently in place to detect and identify material misstatements in Rogers County’s financial statements, detect fraud, and identify and address risks related to Rogers County’s financial reporting. Where deficiencies are identified, processes and procedures will be implemented to identify fraud, detect material misstatements in the financial statements, and address risks related to financial reporting. County Clerk: The County Clerk works with the BOCC and all elected officials to develop and implement policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. These policies are intended to ensure the accuracy of the County’s financial statements, Estimate of Needs, SEFA, and compliance with all applicable federal and state laws, regulations, and/or codes. The County Clerk will continue to perform the duties of her office in accordance with Oklahoma law. Where appropriate, the County Clerk will participate in the development and implementation of policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. County Treasurer: The County Treasurer was engaged to compile the SEFA report. Each department is responsible for reporting its own Federal revenues and expenditures. County Sheriff: The County Sheriff will work with the BOCC and all elected officials to develop and implement policies and procedures to ensure Rogers County’s SEFA is prepared timely and accurately. Criteria: 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. 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.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 565784 2021-008
    Material Weakness Repeat
  • 565785 2021-011
    Material Weakness Repeat
  • 565786 2021-012
    Material Weakness
  • 565787 2021-013
    Material Weakness
  • 565789 2021-011
    Material Weakness Repeat
  • 565790 2021-012
    Material Weakness
  • 565791 2021-013
    Material Weakness
  • 1142226 2021-008
    Material Weakness Repeat
  • 1142227 2021-011
    Material Weakness Repeat
  • 1142228 2021-012
    Material Weakness
  • 1142229 2021-013
    Material Weakness
  • 1142230 2021-008
    Material Weakness Repeat
  • 1142231 2021-011
    Material Weakness Repeat
  • 1142232 2021-012
    Material Weakness
  • 1142233 2021-013
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $258,950
20.600 State and Community Highway Safety $102,567
15.226 Payments in Lieu of Taxes $89,702
21.016 Equitable Sharing $85,683
16.710 Public Safety Partnership and Community Policing Grants $73,444
12.106 Flood Control Projects $43,406
97.073 State Homeland Security Program (shsp) $33,000
21.019 Coronavirus Relief Fund $13,888
16.738 Edward Byrne Memorial Justice Assistance Grant Program $9,931
97.042 Emergency Management Performance Grants $7,826