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17 <br /> 81AULDIN N4920shl-1, <br /> -1 ENKINS <br /> Comments, Recommendations, ORANGE COUNTY <br /> and Other Issues (Continued) NORTH CAROLINA <br /> Material Weaknesses Reported (Continued) <br /> 2016-003 Capital Asset Reporting <br /> Internal controls should be in place to ensure the subsidiary ledgers for the County's capital assets, both governmental and <br /> business-type activities, include all capital assets purchased or constructed during the fiscal year. Additionally, subsidiary ledgers <br /> should be maintained to track the capital assets by cost and calculate annual depreciation amounts for the capital assets. <br /> Material misstatements were detected by County management in the reporting of the current year additions to the County's <br /> capital asset balances, as well as some previously unrecorded capital assets. Adjustments of approximately $4,140,000 were <br /> needed to correctly report the capital assets, including $1,023,000 of capital assets previously expensed in prior periods. <br /> 2016-005 Schedule of Expenditures of Federal and State Awards <br /> 2 CFR 200.302(b)(1) states that all nonfederal entities must identify in its accounts all federal awards received and expended. <br /> The schedule of expenditures of federal and state awards (SEFSA) should be derived from, and relate directly to, the underlying <br /> accounting and other records used to prepare the financial statements for the County. During the preparation of the schedule of <br /> expenditures of federal and state awards, it was noted the County was preparing the report based on revenues, rather than <br /> expenditures. The majority of the County's federal and state awards are related to health and human service grant activity, which <br /> is maintained outside of the County's finance department. As such, the County did not have procedures in place to permit for the <br /> reconciliation of the schedule of expenditures of federal and state awards to the underlying expenditures of the County. Ultimately <br /> the County was able to internally provide the necessary underlying records to support the expenditures reported on the schedule <br /> of expenditures of federal and state awards, but the reconciliation was performed with the Finance department and the <br /> department of Social Services working together to go through the general ledger and supporting workpapers to reconcile the <br /> activity of the County to the SEFSA. This process was not complete until January 2017. <br /> 13 <br />