Audit 3470

CFDA Number: 11.307 CFDA Title: Economic Adjustment Assistance Program Federal Agency: U.S. Department of Commerce Economic Development Administration Award Number: 04-79-07293 Type of Finding: Material Weakness Compliance Requirements: Activities Allowed or Unallowed Criteria: The regulations in 2 CFR section 200.303(a) state that the entity must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: McCreary County Heritage Foundation, Inc. (the "Foundation") has not established proper segregation of duties regarding internal controls over its federal awards. The objective in the design of primary internal controls is to ensure that an individual does not have access to both physical assets and the related accounting records, or access to all phases of a transaction. The Treasurer is involved in all aspects of cash receipts, cash disbursements, recording transactions in the general ledger, performing account reconciliations, and providing financial reports to the Board of Directors. Cause: Due to the limited number of employees, the Foundation cannot achieve separation of duties related to its primary internal controls over federal awards. Effect or Potential Effect: The potential effect of the Foundation not having internal controls over federal awards is that there is a significant risk that noncompliance may occur and not be prevented or detected. Questioned Costs: None Context: The Foundation has not established primary internal controls over federal awards which increases the risk that noncompliance may occur and not be prevented or detected. However, the Foundation has established secondary controls achieved primarily through the Board of Directors' review of financial information and approval of non-operating expenditures prior to disbursement. Repeat Finding from Prior Year: No Recommendation: The Foundation should strive to separate accounting duties where possible, and should attempt to strengthen primary internal controls over federal awards, wherever possible and especially when additional personnel may be hired/assigned to the accounting functions. Views of Responsible Officials and Corrective Action Planned: Management of the Foundation concurs with the audit finding.

CFDA Number: 11.307 CFDA Title: Economic Adjustment Assistance Program Federal Agency: U.S. Department of Commerce Economic Development Administration Award Number: 04-79-07293 Type of Finding: Noncompliance Compliance Requirements: Reporting Criteria: The regulations in 2 CFR section 200.501 (a) requires a single or program-specific audit for any year in which an entity expends $750,000 or more in federal awards. Per 2 CFR Section 200.501 (c), a program specific audit may be elected when an entity expends federal awards under only one federal program and the Program does not require a financial statement audit. In addition, in accordance with 2 CFR Section 200.507 for Program Specific Audits , the audit must be submitted within the earlier of 30 calendar days after receipt of the auditor's reports or 9 months after the end of the audit period. Condition: The Foundation expended greater than $750,000 under one federal program for the year ended December 31, 2020 but did not have a program-specific audit performed. Cause: The Foundation was not aware of the audit requirement since it does not receive federal funds on a recurring basis. Effect or Potential Effect: The Foundation's ability to obtain future funding for their projects could be impacted by not complying with the reporting requirements referred to above. Questioned Costs: None Context: The occurrence of not complying with the reporting requirements referred to above appears to be an isolated instance. Repeat Finding from Prior Year: No Recommendation: The Foundation should take appropriate action to ensure that all reporting requirements are known in the future and met on all of its potential future federal programs. Views of Responsible Officials and Corrective Action Planned: Management of the Foundation concurs with the audit finding. When management discovered the requirement had not been met, they immediately contacted an independent auditor to perform the program-specific audit to satisfy the reporting requirements.

CFDA Number: 11.307 CFDA Title: Economic Adjustment Assistance Program Federal Agency: U.S. Department of Commerce Economic Development Administration Award Number: 04-79-07293 Type of Finding: Material Weakness Compliance Requirements: Activities Allowed or Unallowed Criteria: The regulations in 2 CFR section 200.303(a) state that the entity must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: McCreary County Heritage Foundation, Inc. (the "Foundation") has not established proper segregation of duties regarding internal controls over its federal awards. The objective in the design of primary internal controls is to ensure that an individual does not have access to both physical assets and the related accounting records, or access to all phases of a transaction. The Treasurer is involved in all aspects of cash receipts, cash disbursements, recording transactions in the general ledger, performing account reconciliations, and providing financial reports to the Board of Directors. Cause: Due to the limited number of employees, the Foundation cannot achieve separation of duties related to its primary internal controls over federal awards. Effect or Potential Effect: The potential effect of the Foundation not having internal controls over federal awards is that there is a significant risk that noncompliance may occur and not be prevented or detected. Questioned Costs: None Context: The Foundation has not established primary internal controls over federal awards which increases the risk that noncompliance may occur and not be prevented or detected. However, the Foundation has established secondary controls achieved primarily through the Board of Directors' review of financial information and approval of non-operating expenditures prior to disbursement. Repeat Finding from Prior Year: No Recommendation: The Foundation should strive to separate accounting duties where possible, and should attempt to strengthen primary internal controls over federal awards, wherever possible and especially when additional personnel may be hired/assigned to the accounting functions. Views of Responsible Officials and Corrective Action Planned: Management of the Foundation concurs with the audit finding.

CFDA Number: 11.307 CFDA Title: Economic Adjustment Assistance Program Federal Agency: U.S. Department of Commerce Economic Development Administration Award Number: 04-79-07293 Type of Finding: Noncompliance Compliance Requirements: Reporting Criteria: The regulations in 2 CFR section 200.501 (a) requires a single or program-specific audit for any year in which an entity expends $750,000 or more in federal awards. Per 2 CFR Section 200.501 (c), a program specific audit may be elected when an entity expends federal awards under only one federal program and the Program does not require a financial statement audit. In addition, in accordance with 2 CFR Section 200.507 for Program Specific Audits , the audit must be submitted within the earlier of 30 calendar days after receipt of the auditor's reports or 9 months after the end of the audit period. Condition: The Foundation expended greater than $750,000 under one federal program for the year ended December 31, 2020 but did not have a program-specific audit performed. Cause: The Foundation was not aware of the audit requirement since it does not receive federal funds on a recurring basis. Effect or Potential Effect: The Foundation's ability to obtain future funding for their projects could be impacted by not complying with the reporting requirements referred to above. Questioned Costs: None Context: The occurrence of not complying with the reporting requirements referred to above appears to be an isolated instance. Repeat Finding from Prior Year: No Recommendation: The Foundation should take appropriate action to ensure that all reporting requirements are known in the future and met on all of its potential future federal programs. Views of Responsible Officials and Corrective Action Planned: Management of the Foundation concurs with the audit finding. When management discovered the requirement had not been met, they immediately contacted an independent auditor to perform the program-specific audit to satisfy the reporting requirements.