Carter County

Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires auditees to prepare an accurate Schedule of Expenditures of Federal Awards containing awards expended, assistance listing title and number, award number, name of the Federal agency, name of pass-through entity, and awards paid to subrecipients. Condition: During our audit, we noted that the Schedule of Expenditures of Federal Awards contained errors. The County's current internal controls over Schedule of Expenditures of Federal Awards reporting are not sufficient enough to ensure correct reporting. This finding is a repeat finding and was reported in the most recent audit for the years ended December 31, 2022 and 2021. Discrepancies in amounts reported on the SEFA and amounts supported by underlying accounting records are summarized as follows: [ see chart ]. Cause: The County has not implemented a proper system of internal control over SEFA preparation, such as a reconciliation to underlying accounting records or having a separate individual review the SEFA for clerical accuracy after it has been prepared. Reasons for discrepancies varied. Effect: The SEFA presented for the audit did not accurately reflect the County's actual expenditures of federal awards for the year ended December 31, 2023. Recommendation: We recommend that the County implement internal controls to ensure that the SEFA completely and accurately states the expenditures of federal awards of the County each year, such as performing a reconciliation between the SEFA and underlying accounting records. Federal reimbursement grants should be reported on the SEFA based on reimbursable expenditures made during the year. Management's Response: Improvements in SEFA preparation have been implemented in order to ensure accuracy.

2022-002 Suspension and Debarment Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Effort Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: 2022 and 2021 Pass-through Entity: n/a Questioned Costs: None Type of Finding: Material Weakness in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures in place to ensure the required certifications for covered contracts and subawards are received, documented, and contracts are not made with a debarred or suspended party. Condition: During our testing, it was noted the County did not have adequate controls designed to ensure that suspension and debarment requirements were being met. Context: Of the 5 vendors tested, we noted that all 5 were not verified by the County or certifications from the vendor collected to ensure the vendors were neither suspended or debarred. Cause: The County has not designed and implemented internal controls to ensure compliance with suspension and debarment requirements outlined. Effect: Failure to obtain the required certifications or perform verification procedures with SAM.gov could result in the payment of federal funds to vendors that are suspended or debarred from participation in federal assistance programs. Recommendation: We recommend the County implement internal controls to ensure that suspension and debarment assessment are performed during the procurement and contracting phase. In addition, sufficient documentation should be retained to evidence suspension and debarment verification is performed. Repeat Finding: No Views of Responsible Officials: There is no disagreement with the audit finding.

2022-003 Reporting Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Effort Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: 2022 and 2021 Pass-through Entity: n/a Questioned Costs: None Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement: Interim Report: Provide initial overview of status and uses of funding. The interim report will include a recipient’s expenditures through July 31, 2021 by category and at the summary level. The reporting requirements vary by type of recipient, the total allocation amount, and the date which the recipient first received its allocation. This is a one-time report. Project and Expenditure Report: Report on financial data, projects funded, expenditures, and contracts and subawards over $50,000, and other information. Project and Expenditure Reports are due on a regular, recurring basis after theInterim Reports. The reporting frequency and deadlines vary by type of recipientand total allocation amount. Condition: During our testing, it was noted the County did not have adequate controls designed to ensure that reporting requirements were being met, which led to these reports not being submitted. Context: Of the 2 reports required to be completed, none were prepared or submitted. Cause: The County is in noncompliance with reporting requirements. Effect: The County is in noncompliance with reporting requirements. Recommendation: We recommend the County implement internal control to ensure that reporting requirements are performed. Repeat Finding: No Views of Responsible Officials: There is no disagreement with the audit finding.

2022-004 Subrecipient Monitoring Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Effort Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: 2022 and 2021 Pass-through Entity: n/a Questioned Costs: None Type of Finding: Material Weakness in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: The requirements for subrecipient monitoring for the subaward are contained in 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h); federal awarding agency regulations; and the terms and conditions of the award. The County must do the following: (1) Review the pass-through entity (PTE’s) subrecipient monitoring policies and procedures to gain an understanding of the PTE’s process to identify subawards, evaluate risk of noncompliance, and perform monitoring procedures based upon identified risks. (2) Review subaward documents including the terms and conditions of the subaward to ascertain if, at the time of subaward (or subsequent subaward modification), the PTE made the subrecipient aware of the award information required by 2 CFR section 200.331(a) sufficient for the PTE to comply with federal statutes, regulations, and the terms and conditions of the award. (3) Review the PTE’s documentation of monitoring the subaward and consider if the PTE’s monitoring provided reasonable assurance that the subrecipient used the subaward for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. (4) Ascertain if the PTE verified that subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, met this requirement (2 CFR section 200.331(f)). This verification may be performed as part of the required monitoring under 2 CFR section 200.331(d)(2) to ensure that the subrecipient takes timely and appropriate action on deficiencies detected though audits. Condition: During our testing, it was noted the County did not have adequate controls designed to ensure that subrecipient monitoring requirements were being met. Context: Of the 3 subrecipients tested, all 3 did not included signed, formal agreements between the County and subrecipients. Cause: The County has not designed and implemented internal controls to ensure compliance with subrecipient monitoring requirements. Effect: The County was not communicating the required information to subrecipients through a formal agreement. Recommendation: We recommend the County implement internal control(s) to ensure that required subrecipient monitoring through formal agreements is completed. Repeat Finding: No Views of Responsible Officials: There is no disagreement with the audit finding.

2022-005 Reporting, Matching and Earmarking Federal Agency: U.S. Department of Homeland Security Federal Program Name: Disaster Grants – Public Assistance Assistance Listing Number: 97.036 Federal Award Identification Number and Year: N/A Award Period: 2022 and 2021 Pass-through Entity: n/a Questioned Costs: None Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement: Reporting: Quarterly progress reports are due from recipients on all open large projects 30 days after the end of each calendar quarter. Matching: Costs must be on a shared basis, as specified in the FEMA-State Agreement. In general, the minimum federal share is 75 percent of eligible costs (44 CFR section 206.65). The nonfederal share that is split between the state and each subrecipient may vary. The accountability for meeting the matching requirement resides with the state and is determined at the time of project accounting as part of project closeout. Earmarking: For major disaster or emergency declarations on or after November 13, 2007, the state makes management cost funding available to subrecipients, as prescribed in the state administrative plan, to administer PA projects (interim final rule, 44 CFR sections 206.207 and 206.228 and Part 207, effective November 13,2007, 72 FR 57876 through 57878, October 11, 2007). Condition: During our testing, it was noted the County did not have adequate controls designed to ensure that reporting requirements, which would be used to support and track matching and earmarking, were being met. Context: No reports, which would have been used to support and track matching and earmarking, were completed and submitted. Cause: The County has not designed and implemented internal controls to ensure compliance with programs specific reporting, matching and earmarking, requirements. Effect: The County is in noncompliance with reporting, matching and earmarking, requirements. Recommendation: We recommend the County implement internal controls to ensure that required reporting, which includes matching and earmarking, is completed timely as required. Repeat Finding: No Views of Responsible Officials: There is no disagreement with the audit finding.

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