Finding 577019 (2021-008)

Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. 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). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. 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. [….]