La Paz CountyLocal Government

Criteria: Policies and procedures should be established to ensure that general ledger activity for Federal and State grants and contracts is recorded in the proper County fund. In addition, grant agreements typically specify billing frequencies for submitting reimbursement requests. For those agreements that do not, best practice requires reimbursement requests are processed within a reasonable amount of time. In addition, grant revenues should be reported in the same period as the related reimbursed expenditures. Modified accrual accounting focuses on whether resources can be collected. If a government is in a position to obtain resources to which it has claim during its availability period, but fails to do so, those resources should be considered to be available for revenue recognition purposes, even if they were not actually collected during the availability period. This ensures timely receipt of amounts earned and ensures that all eligible expenditures are reimbursed, allowing for the adequate monitoring of grant activities. A thorough understanding and tracking process of all Federal and State contracts ensures a complete and accurate Schedule of Expenditures of Federal Awards as well as proper reporting to the granting agency and compliance with grant requirements. Condition: Timely analysis of grants and contracts, including an analysis of expenditures versusdrawdowns, was not performed. In some cases reimbursements were significantly delayed due to untimely requests being filed. Cause and Effect: The County does not have a centralized process specifically established for the ongoing accounting of federal and state contracts. As a result, there is an increased risk that accounting errors may occur and an increase in difficulty identifying and summarizing all Federal awards for the preparation of the Schedule of Expenditures of Federal Awards. Auditors? Recommendations: We recommend the County establish policies and procedures to appropriately track its federal and state contracts within the general ledger on an ongoing basis. In addition, we recommend that the County create policies and procedures to monitor grants to ensure timely filing of reimbursement requests.

Criteria: To satisfy the standards required for recipients of federal funds, a physical inventory of furniture, equipment, and vehicles purchased with federal monies costing $5,000 or more, and having useful lives over 1 year should be conducted at least every two years and reconciled to the capital asset list at least once every two years. In addition, the Public Health Emergency Response pass through agreement with the state require a state asset id tag be issued for equipment purchased under cfda #93.354 and the state pass through agreement for cfda# 90.404 requires equipment purchased with grant proceeds be included on an inventory listing detailing funding source, location in addition to other information. Condition: Following the fiscal year 2019 audit, the County did perform an inventory but did not reconcile the results of the inventory observation performed to the capital asset records and make the appropriate adjustments as a result of the observation. A state asset id tag was not initially requested for the equipment purchased under cfda# 93.354 and the equipment purchased under cfda# 90.404 was not initially included on the inventory listing. Cause and Effect: Due to turnover in the department, the County did not reconcile the results of the inventory observation to the capital asset records. As a result, the County did not fully comply with the UAMAC or federal regulations.

Criteria: Policies and procedures should be established to ensure that general ledger activity for Federal and State grants and contracts is recorded in the proper County fund. In addition, grant agreements typically specify billing frequencies for submitting reimbursement requests. For those agreements that do not, best practice requires reimbursement requests are processed within a reasonable amount of time. In addition, grant revenues should be reported in the same period as the related reimbursed expenditures. Modified accrual accounting focuses on whether resources can be collected. If a government is in a position to obtain resources to which it has claim during its availability period, but fails to do so, those resources should be considered to be available for revenue recognition purposes, even if they were not actually collected during the availability period. This ensures timely receipt of amounts earned and ensures that all eligible expenditures are reimbursed, allowing for the adequate monitoring of grant activities. A thorough understanding and tracking process of all Federal and State contracts ensures a complete and accurate Schedule of Expenditures of Federal Awards as well as proper reporting to the granting agency and compliance with grant requirements. Condition: Timely analysis of grants and contracts, including an analysis of expenditures versus drawdowns, was not performed. In some cases reimbursements were significantly delayed due to untimely requests being filed. Cause and Effect: The County does not have a centralized process specifically established for the ongoing accounting of federal and state contracts. As a result, there is an increased risk that accounting errors may occur and an increase in difficulty identifying and summarizing all Federal awards for the preparation of the Schedule of Expenditures of Federal Awards.

Criteria: Uniform guidance requires the organization to comply with its stated purchasing policies. The County?s policies adhere to the State?s Uniform Accounting Manual for Arizona Counties (UAMAC), section VI-C, published by the State of Arizona Auditor General?s office, which requires Counties to develop and adhere to written policies and procedures to safeguard assets. UAMAC, section VI-FPurchasing, states requisitions should be prepared, reviewed for budgetary approval, and a then purchase orders should be prepared, prior to the purchases being made or liabilities being incurred. Condition: Purchase requisitions and purchase orders are often prepared and approved after the purchase has been made and the liability on the County has already been incurred. Noted one employee?s payroll lacked approval signatures as required by County policy. Cause and Effect: Purchasing policies and controls are being bypassed and disbursements are being made without following County policy. This increases the risk that unapproved expenditures could be made and budgetary overruns occur. Payroll policies and controls were not followed. This could result in inappropriate overtime being paid and charged to a grant.

2019-101-Capital Asset Inventory (Significant deficiency, Compliance Finding: Repeat Finding) Federal program information: Funding agencies: Department of Treasury, Department of Health and Human Services, Department of Homeland Security Titles: Equitable Sharing, Public Health Emergency Preparedness, Homeland Security Grant Program CFDA numbers: 21.016, 93.074, 97.067 Award numbers and years CFDA 21.016- Unknown, July 1, 2018 through June 30, 2020 CFDA 93.074- ADHS 17-133193, July 1, 2018 through June 30, 2019 CFDA 97.067- 17-OPSG-17518-02, 17-OPSG-170518-03, 180505-01, 18-OPSG-180434-01, 16-OPSG-160506-04, January 8, 2018 through December 31, 2019 Pass-through grantor: CFDA 21.016- Direct, CFDA 93.074- Arizona Department of Health Services, CFDA 97.067- Arizona Department of Homeland Security Compliance Requirements: Equipment and Real Property Management Questioned Costs: N/A Criteria: To satisfy the standards required for recipients of federal funds, a physical inventory of furniture, equipment, and vehicles purchased with federal monies costing $5,000 or more, and having useful lives over 1 year should be conducted at least every two years and reconciled to the capital asset list at least once every two years. Condition: The County has not performed an inventory since fiscal year 2015 and did not reconcile the results of the inventory observation performed in fiscal year 2015 to the capital asset records and make the appropriate adjustments as a result of the observation. Cause and Effect: Due to turnover in the department, the County did not reconcile the results of the inventory observation to the capital asset records. As a result, the County did not fully comply with the UAMAC or federal regulations. Auditors? Recommendations: The County should perform a physical inventory observation at least every two years and reconcile the inventory observation to the capital asset records and investigate and adjust records, as necessary. Also, see finding 2019-003. This finding is similar to prior year finding 2018-101.

2019-102- Timely Account Reconciliation and Financial Statement Preparation (Material Weakness: Repeat Finding) Federal program information: Funding agencies: Department of Treasury, Department of Health and Human Services, Department of Homeland Security Titles: Equitable Sharing, Public Health Emergency Preparedness, Homeland Security Grant Program CFDA numbers: 21.016, 93.074, 97.067 Award numbers and years: CFDA 21.016- Unknown, July 1, 2018 through June 30, 2020 CFDA 93.074- ADHS 17-133193, July 1, 2018 through June 30, 2019 CFDA 97.067- 17-OPSG-17518-02, 17-OPSG-170518-03, 180505-01, 18-OPSG-180434-01, 16-OPSG-160506-04, January 8, 2018 through December 31, 2019 Pass-through grantor CFDA 21.016- Direct, CFDA 93.074- Arizona Department of Health Services, CFDA 97.067- Arizona Department of Homeland Security Compliance Requirements: Allowable Costs/Cost Principles Questioned Costs: N/A Criteria: To help ensure that financial reports, including audited financial statements, are accurate and prepared timely enough to meet filing requirements and provide useful information for decision making, general ledger accounts, including the County Treasurer Investment Pool, should be reconciled monthly and annual financial statements should be prepared within a reasonable period after year-end. Condition: During part of the fiscal year, the County Treasurer system was not reconciled to the County?s general ledger on a timely basis, and certain other general ledger accounts were not reconciled by the County until subsequent to fiscal year end. Cause and Effect: Due to employee turnover within the finance department the County did not have the necessary resources to properly reconcile and adjust account balances on a timely basis. As a result, the County may have not had accurate and timely financial information for decision making and there is an increased risk of errors in the annual financial statements. Auditors? Recommendations: The County should evaluate its resources necessary to complete monthly reconciliations and the year-end closing and financial reporting process and consider the need to devote additional resources to the financial reporting process. Also, see finding 2019-006. This finding is similar to prior-year finding 2018-102.

2019-103- Grant Accounting and Preparation of Schedule of Expenditures of Federal Awards (Material Weakness) Federal program information: Funding agencies: Department of Treasury, Department of Health and Human Services, Department of Homeland Security Titles: Equitable Sharing, Public Health Emergency Preparedness, Homeland Security Grant Program CFDA numbers: 21.016, 93.074, 97.067 Award numbers and years: CFDA 21.016- Unknown, July 1, 2018 through June 30, 2020 CFDA 93.074- ADHS 17-133193, July 1, 2018 through June 30, 2019 CFDA 97.067- 17-OPSG-17518-02, 17-OPSG-170518-03, 180505-01, 18-OPSG-180434-01, 16-OPSG-160506-04, January 8, 2018 through December 31, 2019 Pass-through grantor: CFDA 21.016- Direct, CFDA 93.074- Arizona Department of Health Services, CFDA 97.067- Arizona Department of Homeland Security Compliance Requirements: Reporting Questioned Costs: N/A Criteria: Policies and procedures should be established to ensure that general ledger activity for Federal and State grants and contracts is recorded in the proper County fund. The accounting for the programs should be monitored on an ongoing basis to determine the appropriate criteria for earning applicable revenue and applicable receivables, and unearned revenue and County subsidies should be calculated properly based on this analysis. A thorough understanding and tracking process of all Federal and State contracts ensures a complete and accurate Schedule of Expenditures of Federal Awards as well as proper reporting to the granting agency. Condition: Timely analysis of grants and contracts, including an analysis of expenditures versus drawdowns, was not performed. Cause and Effect: The County does not have a centralized process specifically established for the ongoing accounting of federal and state contracts. As a result, there is an increased risk that accounting errors may occur and an increase in difficulty identifying and summarizing all Federal awards for the preparation of the Schedule of Expenditures of Federal Awards. Auditors? Recommendations: The County should establish policies and procedures to appropriately track its federal and state contracts within the general ledger on an ongoing basis. Also, see finding 2019-009.

2019-104- Reporting (Material Weakness, Compliance Finding) Federal program information: Funding agencies: Department of Treasury Titles: Equitable Sharing CFDA numbers: 21.016 Award numbers and years CFDA 21.016- Unknown, July 1, 2018 through June 30, 2020 Pass-through grantor N/A Compliance Requirements: Reporting Questioned Costs: N/A Criteria: The County?s Sheriff?s department must annually submit a federal Equitable Sharing Agreement and Certification (ESAC) form in the eShare portal, regardless of whether funds were received or maintained during the fiscal year, in order to maintain compliance. The ESAC must be reviewed and approved by the head of the law enforcement agency and a designated official of the governing body prior to submission. Agencies must submit the ESAC within two months after the end of their fiscal year. No extensions to the deadline are granted by the awarding agency. Agencies are deemed non-compliant until all paperwork is received and approved. An agency that remains non-compliant for more than a year will have all approved sharing pending disbursement extinguished. Condition: The County?s Sheriff?s department failed to submit the ESAC report at the end of fiscal years 2018 and 2019, resulting in the agency being non-compliant with the reporting requirements of the program. Cause and Effect: The County?s Sheriff?s department does not have a process specifically established for the ongoing accounting and reporting of federal and state contracts. As a result, the County?s Sheriff?s department has had funding for the equitable sharing program suspended until all required reports are submitted. Auditors? Recommendations: The agency?s ESAC reports for the Sheriff?s department equitable sharing program should be completed as soon as possible to re-establish the program. The County should evaluate resources and establish procedures and controls to ensure reporting requirements for all federal and state grants are completed and submitted timely.

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