Finding 573707 (2023-004)

Condition: During our review and reconciliation of the Schedule of Expenditures of Federal Awards (SEFA) as initially prepared by the County, we identified federal programs that were not listed accurately which resulted in federal expenditures being overstated stated by $929,420 • Expenditures reported on the SEFA for ALN 16.607 - Bulletproof Vest Partnership Program were $0. Actual federal expenditures obtained from the County’s records confirm $17,235 expended for a variance of ($17,235). • Expenditures reported on the SEFA for ALN 16.554 - National Criminal History Improvement Program (NCHIP) were $0. Actual federal expenditures obtained from the County’s records confirm $1,788 expended for a variance of ($1,788). • Expenditures reported on the SEFA for ALN 21.019 - Coronavirus Relief Fund were $1,100,510. Actual federal expenditures obtained from the County’s records confirm $0 expended for a variance of $1,100,510. • Expenditures reported on the SEFA for ALN 97.036 - Disaster Grants - Public Assistance (Presidentially Declared Disasters) - DR-4530 were $0. Actual federal expenditures obtained from the County’s records confirm $144,826 expended for a variance of ($144,826). • Expenditures reported on the SEFA for ALN 97.036 - Disaster Grants - Public Assistance (Presidentially Declared Disasters) - DR-4530 were $0. Actual federal expenditures obtained from the County’s records confirm $7,241 expended for a variance of ($7,241). Additionally, the County failed to present $4,199,136 in subrecipient expenditures on the SEFA for ALN 21.027 - Coronavirus State and Local Fiscal Recovery Funds. 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 the federal expenditures on the SEFA. 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 accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. The Board of County Commissioners (BOCC) should review and approve SEFA in an open meeting. Management Response: Board of County Commissioners: The Board of County Commissioners is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The Board of County Commissioners, 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 Board of County Commissioners 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 Board of County Commissioners 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, and the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The Board of County Commissioners, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of federal funds, will evaluate the processes and procedures currently in place to ensure the accuracy of SEFA reporting and detect potential inaccuracies and/or misstatements. 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, 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 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.