CRAIG COUNTYLocal Government

Finding 2021-015 - Lack of County-Wide Controls Over Major Federal Program - Coronavirus Relief Fund (Repeat Finding - 2018-015, 2020-015) 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; 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: Through the process of gaining an understanding of the County?s internal control structure for federal programs, it was noted that county-wide internal controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed. Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with grant requirements. Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in unrecorded transactions, undetected errors, misappropriation of funds, and noncompliance with grant requirements. Recommendation: OSAI recommends that the County implement a system of internal controls to ensure compliance with grant requirements. Management Response: District 1 County Commissioner: I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. District 2 County Commissioner: We have worked on gaining an understanding of federal programs awarded to the County. We would like to be able to receive additional training on the preparation of the Schedule of Expenditures of Federal Awards. We are willing to work with the other County Officials to design and implement control procedures to ensure compliance with federal requirements. District 3 County Commissioner: I was not in office at this time. I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. County Clerk: Each office is responsible to ensuring compliance with the federal programs they receive. I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. Criteria: 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 Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews. Furthermore, 2 CFR ? 200.303 Internal Controls (a) 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).

Finding 2021-016 - Lack of Internal Controls Over Major Federal Program ? Coronavirus Relief Fund (Repeat Finding ? 2018-016, 2020-016) 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; 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 Craig 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. 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: This condition resulted in noncompliance with federal 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: I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. District 2 County Commissioner: We have worked on gaining an understanding of federal programs awarded to the County. We would like to be able to receive additional training on federal grants. We are willing to work with the other County Officials to design and implement control procedures to ensure compliance with federal requirements. District 3 County Commissioner: I was not in office at this time. I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. 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.

Finding 2020-015 - Lack of County-Wide Controls Over Major Federal Program ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (Repeat Finding - 2018-015) 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, DR-4453 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; Period of Performance QUESTIONED COSTS: $-0- Condition: Through the process of gaining an understanding of the County?s internal control structure for federal programs, it was noted that county-wide internal controls regarding Control Environment, Risk Assessment, Information and Communication, and Monitoring have not been designed. Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County is in compliance with grant requirements. Effect of Condition: Without an adequate system of county-wide controls, there is greater risk of a breakdown in control activities which could result in unrecorded transactions, undetected errors, misappropriation of funds, and noncompliance with grant requirements. Recommendation: OSAI recommends that the County implement a system of internal controls to ensure compliance with grant requirements. Management Response: District 1 County Commissioner: I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. District 2 County Commissioner: I was not in office at this time. We have worked on gaining an understanding of federal programs awarded to the County. We would like to be able to receive additional training on the preparation of the Schedule of Expenditures of Federal Awards. We are willing to work with the other County Officials to design and implement control procedures to ensure compliance with federal requirements. District 3 County Commissioner: I was not in office at this time. I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. County Clerk: Each office is responsible to ensuring compliance with the federal programs they receive. I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. Criteria: 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 Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews. Furthermore, 2 CFR ? 200.303 Internal Controls (a) 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).

Finding 2020-016 - Lack of Internal Controls Over Major Federal Program ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) (Repeat Finding - 2018-016) 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, DR-4453 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; Period of Performance QUESTIONED COSTS: $-0- Condition: During the process of documenting the County?s internal controls regarding federal disbursements, we noted that Craig 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. 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: This condition resulted in noncompliance with federal 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: I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. District 2 County Commissioner: I was not in office at this time. We have worked on gaining an understanding of federal programs awarded to the County. We would like to be able to receive additional training on federal grants. We are willing to work with the other County Officials to design and implement control procedures to ensure compliance with federal requirements. District 3 County Commissioner: I was not in office at this time. I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. 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.

Finding 2020-017 - Lack of Internal Controls and Noncompliance with Compliance Requirements: A ? Activities Allowed or Unallowed, B ? Allowable Costs/Costs Principles, and H ? Period of Performance (Repeat Finding - 2018-017) 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, DR-4453 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; Period of Performance QUESTIONED COSTS: $114,456 Condition: We tested a sample of 94 site locations out of 387 and noted the following errors that resulted in $114,456 in questioned costs: ? $50,196 in expenditures for 24 sites were supported by expenditure documentation that had been previously submitted for other sites. ? $11,917 in expenditures for five (5) sites were not supported by any expenditure documentation. ? $40,099 in expenditures were not supported by itemized invoices prepared by a vendor. The County prepared invoices to support these expenditures for rock obtained at the quarry. ? $3,375 in expenditures for County assigned costs for donated pipe was not supported by adequate documentation. ? $8,869 in expenditures could not be tied to adequate supported documentation due to lack of site references. Additionally, for quarry expenditures the County is using calculated prices. The County did not have documentation of written authorization from Federal Emergency Management Agency (FEMA) representatives for the price calculation and for the noncompetitive procurement. An analysis of the costs and reasons for selecting a quarry source was also not documented. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with Uniform Grant Guidance and applicable compliance requirement for Public Assistance Grant. Effect of Condition: These conditions resulted in noncompliance with federal requirements. Further, these conditions could result in unrecorded transactions, undetected errors, misappropriation of federal funds, and inaccurate records. 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: I will work with the other elected officials to gain an understanding of federal grant requirements and to implement a system of internal controls to ensure compliance with grant requirements. District 2 County Commissioner: I was not in office at this time. When this disaster occurred, we had to work with multiple FEMA and Oklahoma Emergency Management (OEM) representatives, and each gave us a different assessment of the damages and different site locations. Because of these multiple assessments, the site locations on the project worksheets often overlapped from one representative?s assessment to another. Additionally, all expenditure information was presented to OEM and approved by OEM representatives prior to receiving reimbursement for the expenditures. However, we are willing to work with the other County Officials to design and implement control procedures to ensure compliance with federal requirements. District 3 County Commissioner: I was not in office at this time. I will work with the other elected officials to implement a system of internal controls to ensure compliance with grant requirements. 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 ? 200.84 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 cost, 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. 2 CFR ? 200.318 (a), General procurement standards, reads as follows: 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.

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