BOARD OF SUPERVISORS OF GREENLEE COUNTY

The County did not ensure 10 payments totaling $62,400 for the Public Health Emergency Preparedness Program were reviewed and approved by independent appropriate personnel Assistance Listings number(s) and name(s): 93.069 Public Health Emergency Preparedness Award number(s) and year(s): CTR055212 July 1, 2023 through June 30, 2024 CTR055212 July 1, 2024 through June 30, 2025 Federal agency: Department of Health and Human Services Pass-through grantor: Arizona Department of Health Services Compliance requirement(s): Allowable costs/cost principles Questioned costs: $62,400 Condition Contrary to federal regulations and the award terms issued by the Arizona Department of Health Services (ADHS), the County did not ensure appropriate personnel reviewed and approved Public Health Emergency Preparedness Program (Program) expenditures, ensure adequate documentation was maintained justifying the expenditures were necessary and reasonable for the Program’s purpose, and ensure that the time and effort charged to the Program were for allowable costs. Specifically, the County’s contracted health director inappropriately approved all 10 purchase orders we tested totaling $62,400 that authorized payments for his own contracted professional services. Additionally, the County did not require an independent appropriate review of these contracted services prior to payment. Finally, the County and contracted health director failed to maintain detailed documentation to describe what work the contracted health director performed and why it was necessary and reasonable for the Program’s performance. Although, the contracted health director prepared a “consulting log” to document how time was split between miscellaneous Greenlee County administrative duties, epidemiological services provided for Graham County for which the county receives reimbursement, and duties related to the Program’s administration, the descriptions were limited to 1 or 2 words and thus did not provide adequate supporting documentation to justify charges to the Program. Effect The chief financial officer’s decision to allow the contracted health director to approve his own charges for services and not require an independent appropriate review increased the risk that $62,400 may not have been spent in accordance with the award terms and conditions and federal regulations. It also increased the risk that those who were intended to benefit from the Program may not receive all the benefits they otherwise would have received. Consequently, the County may be required to return these monies to ADHS. In addition, because the County lacks adequate, detailed documentation to support the services provided, ADHS may not be able to rely on the information the County reported to effectively monitor the Program’s administration, including its compliance with federal requirements, ability to prevent and detect fraud, and evaluate the Program’s performance. This may result in additional oversight and monitoring by ADHS and could jeopardize future awards. Cause Although the County agreed to ADHS’ award terms, they did not have policies and procedures in place to ensure Program requirements were met. The County did not assign responsibility for independently reviewing Program expenditure documentation to ensure it was sufficiently detailed and costs were allowable. The County appointed a Program coordinator but did not assign responsibility for overseeing all aspects as required by the grant agreement, such as reviewing and approving charges for services provided to the County. Criteria The County’s grant award terms require the County to appoint a Public Health Emergency Preparedness coordinator to be responsible for overseeing all grant-related activities, budgets, and reports.1 Additionally, per 2 CFR §200.403(g), costs must be adequately documented to be allowable under federal awards. Federal guidelines require establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Additionally, federal internal control standards require the consideration of segregation of duties in designing internal control activities so that incompatible duties are segregated.2 Recommendations to the County 1. Discontinue the contracted health director’s permission to prepare and approve purchase orders and credit card transaction forms that authorize payments for his own contracted professional services and relevant miscellaneous expenses. 2. Strengthen its procedures to ensure that County personnel perform an independent review and approval of all Program expenditures to prevent potential conflicts and misuse of federal funds. 3. Strengthen internal controls associated with the Program to ensure that all time charged to the Program is supported by sufficiently detailed documentation. 1 Intergovernmental agreement with Arizona Department of Health Services (Contract No. CTR055212) 2 Standards for Internal Control in the Federal Government, Principle 10.21, May 2025. Views of responsible officials County management concurs with this finding. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials regarding these recommendations. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.

2023-101- Single Audit Reporting Package Not Filed Timely (Repeat Finding; Significant deficiency, Compliance Finding) Federal program information: Funding agencies: U.S. Department of Agriculture; U.S. Department of Treasury Titles: Watershed Protection and Flood Prevention; Coronavirus State and Local Fiscal Recovery Funds; Local Assistance and Tribal Consistency Fund. Assistance Listings Number: 10.904; 21.027; 21.032 Award numbers and years NR229457XXXXC004; None; None; July 1, 2022 through June 30, 2023; March 1, 2021 through December 31, 2024; July 1, 2022 through June 30, 2023 Compliance Requirements: Reporting Questioned Costs: Not applicable Criteria: 2 CFR 200.512 of the Uniform Guidance requires that the County submit an annual single audit reporting package and submit the data collection form prior to nine months after the end of the audit period. Condition: The County did not submit its single audit reporting package or data collection form within the required deadline. The fiscal year ending June 30, 2023 general ledger accounts were not fully closed and reconciled with prepared financial statements until September 2024. As a result, the audit did not begin until well after the County’s reporting deadlines for fiscal year 2023. This finding is similar to prior year finding 2022-101 and was initially reported in fiscal year 2021. Cause and Effect: The County has a limited staff within the finance and accounting department. As such, it is difficult for the department to close each year’s books and reconcile all accounts in a timely manner. As a result the County was unable to meet the nine-month reporting guideline required by the Uniform Guidance. Auditors’ Recommendations: The County should dedicate additional resources to ensure that the accounting records are closed and accurate financial statements are prepared within three to six months after year end. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.

2023-102- Reporting (Significant Deficiency, Compliance Finding) Federal program information: Funding agencies: U.S. Department of Treasury Titles: State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Award numbers and years: None; March 1, 2021 through December 31, 2024 Compliance Requirements: Reporting Questioned Costs: None Criteria: The County is required to submit quarterly and annual Compliance Reports, which includes current period expenditures, cumulative expenditures and a project description along with certain other required information. Condition: During fiscal year 2023, the quarterly and annual Compliance Reports submitted indicated no expenditures incurred. However, expenditures totaling $331,609 were intended to be funded by this program and were ultimately reported within the subsequent fiscal year (2024) Compliance Reports. As a result, the 2023 Compliance Reports were incorrect. Cause and Effect: The County misunderstood the reporting requirements when the Compliance Reports were initially submitted in fiscal year 2023. Upon discovering the error, County personnel contacted the grantor and was informed that expenditures should be reported on the next period’s report. However, the reports submitted for fiscal year 2023 were ultimately incorrect and not in compliance with Treasury guidelines. Auditors’ Recommendations: The County should establish policies to ensure that all federal expenditures are reported in the correct period to the grantor and that the reporting requirements are fully understood. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.