Audit 327907

FY End

2024-06-30

Total Expended

$1.13M

Findings

2

Programs

1

Organization: McNc (NC)

Year: 2024 Accepted: 2024-11-11

Auditor: Forvis Mazars

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
505278	2024-001	Significant Deficiency	-	P
1081720	2024-001	Significant Deficiency	-	P

ALN	Program	Spent	Major	Findings
11.033	Middle Mile (broadband) Grant Program	$1.13M	Yes	1

Contacts

Name	Title	Type
W85LR2HMVMF5	Sarah Taylor	Auditee
9098566073	Tom Hazelwood	Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes federal award activity of MCNC and Affiliate (the "Organization") under programs of the federal government for the year ended June 30, 2024. The information in this schedule is presented in accordance with the requirements of Title 2 of U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards ("Uniform Guidance"). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended and does not present the financial position, changes in net position, or cash flows of the Organization. Therefore, some amounts presented in the Schedule may differ from amounts presented in the consolidated financial statements.

Title: Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.

Title: Indirect Cost Rate Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate The Organization has elected to use the 10% de minimis cost rate.

Finding Details

Finding 2024-001

Internal Controls over Financial Reporting Condition During our audit of the consolidated financial statements as of June 30, 2024, management notified Forvis Mazars that there was an error in the presentation of certain contracts in fiscal year 2023 as they related to ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), resulting in the revision of the June 30, 2023 consolidated financial statements. We noted that the Organization reviewed its contracts and identified the error, however controls in place at the time were unable to identify this error. Criteria Management is responsible for establishing the internal control system in the Organization and management is responsible for monitoring and ensuring established internal controls over the Organization are properly executed. Effect This weakness in controls has the potential for misclassification of revenue contracts to exist and not be detected. Recommendation We recommend management implements controls to review contracts in accordance with ASC 606 on a periodic basis to ensure adherence with U.S. GAAP. Views of Responsible Officials Management agrees with the finding. See Corrective Action Plan.

Finding 2024-001

Internal Controls over Financial Reporting Condition During our audit of the consolidated financial statements as of June 30, 2024, management notified Forvis Mazars that there was an error in the presentation of certain contracts in fiscal year 2023 as they related to ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), resulting in the revision of the June 30, 2023 consolidated financial statements. We noted that the Organization reviewed its contracts and identified the error, however controls in place at the time were unable to identify this error. Criteria Management is responsible for establishing the internal control system in the Organization and management is responsible for monitoring and ensuring established internal controls over the Organization are properly executed. Effect This weakness in controls has the potential for misclassification of revenue contracts to exist and not be detected. Recommendation We recommend management implements controls to review contracts in accordance with ASC 606 on a periodic basis to ensure adherence with U.S. GAAP. Views of Responsible Officials Management agrees with the finding. See Corrective Action Plan.