Grant County

Finding 2021-006 – Lack of Internal Controls Over the Schedule of Expenditures of Federal Awards (SEFA) Condition: Total federal expenditures on the SEFA were understated by $375,034: • Expenditures reported on the SEFA for ALN 97.036 Disaster Grant – Public Assistance were $467,323. Actual federal expenditures obtained from the County’s records confirm $838,525 expended for an overstated variance of $371,202. • Expenditures reported on the SEFA for ALN 15.226 OMES/E911 GIS Tracking were $0. Actual federal expenditures obtained from the County’s records confirm $3,832 expended for an understated variance of $3,832. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures on the SEFA. Effect of Condition: This condition resulted in erroneous reporting and a material misstatement of the County’s SEFA and could result in material noncompliance. Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Grant County. Internal control procedures should be designed and implemented to ensure accurate and timely reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: County Commissioner District 1: We will discuss the SEFA completion in County Officers’ meeting. I will search for resources to aid in the completion of the SEFA. County Commissioner District 2: I will educate myself and do everything possible to become familiar with the requirements of the SEFA. County Commissioner District 3: We will address this issue as a County in the officers’ meetings. County Clerk: We have increased our understanding of the reporting requirement of the SEFA. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. 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 Objective 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.

Finding 2021-007 – Lack of County-Wide Controls Over Major Federal Programs – 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 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions 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 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 complies with federal 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 noncompliance to federal grant requirements. Recommendation: OSAI recommends that the County design and implement a system of county-wide procedures to identify and address risks related to compliance with federal award requirements and to ensure that information is communicated effectively. OSAI also recommends that the County design and implement monitoring procedures to assess the quality of performance over time. These procedures should be written policies and procedures and could be included in the County’s policies and procedures handbook. Management Response: County Commissioner District 1: We need to become more familiar with federal grant requirements and acknowledge that we understand the requirements to fulfill the grant. After which, we can establish the policies and procedures over federal expenditures. County Commissioner District 2: We are planning to meet as a group of officers to address county-wide internal controls and we will incorporate federal grants into these meetings. County Commissioner District 3: This issue will be addressed in the officers’ meetings. County Clerk: We have implemented new online software to assist with FEMA tracking requirements. We have developed open communication between the Emergency Manager, the Commissioners’ Executive Assistant, the County Treasurer, and the County Clerk to assist with implementation of controls. Criteria: 2 CFR § 200.303 - Internal Controls states in part: The non-Federal entity must: (a)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). Also, 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.

Finding 2021-008 – Lack of Internal Controls Over Major Federal Programs – 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 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Grant County has not established procedures to ensure compliance with the following requirements: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; Period of Performance; Reporting: Special Tests and Provisions. 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 to federal compliance requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and design and implement internal control procedures to ensure compliance with federal grant requirements. Management Response: County Commissioner District 2: I will accept the recommendations and will acquire information to research federal grant compliance requirements to ensure adherence to the requirements. County Commissioner District 3: We need to educate ourselves as County Officials to better understand our duties over compliance requirements and research federal grant compliance requirements to ensure adherence to the requirements. County Clerk: We have hired a new Emergency Manager who has attended FEMA classes. We will invite her to share her information in a County Officers’ meeting. 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). Further, 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.

Finding 2021-009 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; and Special Tests and Provisions – 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 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions QUESTIONED COSTS: $105,935 Condition: Upon inquiry of county personnel, review of documentation and procedures, and a test of five (5) out of seventeen (17) project worksheets, the following weaknesses were noted: Project Worksheet 365 (D3) Questioned Cost – $1,257: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the district. Total unsupported county equipment costs $402. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $855. Project Worksheet 872 (D2) Questioned Cost – $15,152: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $939. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $9,946. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported did not exceed the total County documentation. • Unallowed management costs were included in total project expenditures totaling $4,267. Project Worksheet 888 (D2) Questioned Cost – $19,885: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $2,298. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $10,551. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $640. • Unallowed management costs were included in total project expenditures totaling $6,396. Project Worksheet 967 (D2) Questioned Cost – $4,137: • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $940. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $2,408. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $180. • Unallowed management costs were included in total project expenditures totaling $609. Further, upon additional inquiry of staff and review of documentation over 100% of federal expenditures the following was noted: Project Worksheet 365 (D3): • One (1) Quarterly Report was not submitted within 30 days of the end of a calendar quarter. Project Worksheet 756 (D2) Questioned Cost – $41,417: • Project expenditures totaling $41,417 occurred after the period of performance deadline. Project Worksheet 986 (D3) Questioned Cost – $24,087: • Project expenditures totaling $24,087 occurred after the period of performance deadline. 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 federal grant requirements and could result in loss of federal funds 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 all documentation be properly maintained for inspection. Management Response: County Commissioner District 2: I was not in office at this time, but I will discuss with my Administrative Assistant and determine the best way to track all project costs. County Commissioners District 3: I will have my Administrative Assistant double check her numbers and I also will review the documentation. 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: 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. [….]