FAC Explorer

Audit 365778

FY End
2024-12-31
Total Expended
$1.88M
Findings
6
Programs
1
Organization: Cherokee Hills Utility District (TN)
Year: 2024 Accepted: 2025-09-08
Auditor: Strategic Vision Advisory Group Dba M G Goup INC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
575798 2024-001 Significant Deficiency Yes P
575799 2024-002 Significant Deficiency Yes P
575800 2024-003 Significant Deficiency - P
1152240 2024-001 Significant Deficiency Yes P
1152241 2024-002 Significant Deficiency Yes P
1152242 2024-003 Significant Deficiency - P

Programs

ALN Program Spent Major Findings
10.760 Water and Waste Disposal Systems for Rural Communities $1.88M Yes 3

Contacts

Name Title Type
KLPBWAMDFFE9 Ruth Ann Hoogendoorn Auditee
7064552561 H. Vanessa Nabors Auditor
No contacts on file

Notes to SEFA

Title: Note 1 Basis of Presentation Accounting Policies: Expenditures reported on the schedule are reported on the modified accrual bassis 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. De Minimis Rate Used: N Rate Explanation: The District elected not to use the 10% de minimis indirect cost rate under the Uniform Guidance. The accompanying schedule of expenditures of federal awards and state financial assistance includes the federal awards activity of Cherokee Hills Utility District for year ended December 31, 2024. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position, changes in net position or cash flows of the District.
Title: Note 2 Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the schedule are reported on the modified accrual bassis 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. De Minimis Rate Used: N Rate Explanation: The District elected not to use the 10% de minimis indirect cost rate under the Uniform Guidance. Expenditures reported on the schedule are reported on the modified 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.
Title: Note 3 Indirect Cost Allocation Rate Accounting Policies: Expenditures reported on the schedule are reported on the modified accrual bassis 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. De Minimis Rate Used: N Rate Explanation: The District elected not to use the 10% de minimis indirect cost rate under the Uniform Guidance. Cherokee Hills Utility District has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Note 4 Non-cash Awards Accounting Policies: Expenditures reported on the schedule are reported on the modified accrual bassis 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. De Minimis Rate Used: N Rate Explanation: The District elected not to use the 10% de minimis indirect cost rate under the Uniform Guidance. Cherokee Hills Utility District did not receive non-cash federal awards during the year ended December 31, 2024
Title: Note 5 Subrecipients Accounting Policies: Expenditures reported on the schedule are reported on the modified accrual bassis 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. De Minimis Rate Used: N Rate Explanation: The District elected not to use the 10% de minimis indirect cost rate under the Uniform Guidance. Cherokee Hills Utility District did not have expenditures to subrecipients during the year ended December 31, 2024
Title: Note 6 Contingencies Accounting Policies: Expenditures reported on the schedule are reported on the modified accrual bassis 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. De Minimis Rate Used: N Rate Explanation: The District elected not to use the 10% de minimis indirect cost rate under the Uniform Guidance. These programs are subject to compliance audits by grantor agencies. The amount, if any, of expenditures that may be disallowed by the grantor agencies cannot be determined at this time, although the District expects such amounts, if any, to be immaterial.

Finding Details

Finding 2024-001
Condition: The District does not have an adequate segregation of duties between the accounting, treasury, and custody functions. One individual should not have custody of particular assets and be responsible for recording transactions related to those assets. Criteria: Tennessee Code Annotated, Section 9-18-102(a) requires each local government in Tennessee to establish and maintain internal controls. Cause: The District is a small entity with limited resources, which has no full-time office staff. Effect: The risk of errors and irregularities occurring and not being detected in a timely manner increases when functions are not adequately segregated.
Finding 2024-002
Condition: The District maintains its general ledger on a cash basis. Accrual adjustments are only made at year end. Reconciliations for receivables and payables are made at year end as well. Criteria: The District is responsible for preparing annual financial statements in accordance with generally accepted accounting principles. Timely recording of transaction on an accrual basis is in accordance with GAAP and provides management with the tools necessary to make informed financial decisions. Cause: Routine preparation of reconciliations of all detailed account balances is not being performed due to the limited capability of the current accounting system; therefore all transactions are not being recorded. Effect: The current accounting system is not capable of recording beginning balances for any balance sheet accounts. This results in the absence of balances in the accounts on the balance sheet, therefore, financial decisions are being made based on incomplete data.
Finding 2024-003
Condition: Three of the twelve (25%) deposits tested had receipts that were not deposited within the three working day requirement. Criteria: Section 6-56-111(a). Tennessee Code Annotated, states: Every municipal official handling public funds shall be required to, as soon as practical, but no later than (3) working days after the receipt by such municipal official of any public funds, deposit the funds to the credit of such municipality’s office bank account, or bank accounts. Cause: The District is a small entity with limited resources including an office manager with no other office staff. Effect: This creates the possibility of misuse or loss of collections. Effect: Revenue figures may be inaccurate if receipts are not posted in a timely manner. This leads to discrepancies in reported revenue and impacts the reliability of financial reports, potentially resulting in misinformed business decisions.
Finding 2024-001
Condition: The District does not have an adequate segregation of duties between the accounting, treasury, and custody functions. One individual should not have custody of particular assets and be responsible for recording transactions related to those assets. Criteria: Tennessee Code Annotated, Section 9-18-102(a) requires each local government in Tennessee to establish and maintain internal controls. Cause: The District is a small entity with limited resources, which has no full-time office staff. Effect: The risk of errors and irregularities occurring and not being detected in a timely manner increases when functions are not adequately segregated.
Finding 2024-002
Condition: The District maintains its general ledger on a cash basis. Accrual adjustments are only made at year end. Reconciliations for receivables and payables are made at year end as well. Criteria: The District is responsible for preparing annual financial statements in accordance with generally accepted accounting principles. Timely recording of transaction on an accrual basis is in accordance with GAAP and provides management with the tools necessary to make informed financial decisions. Cause: Routine preparation of reconciliations of all detailed account balances is not being performed due to the limited capability of the current accounting system; therefore all transactions are not being recorded. Effect: The current accounting system is not capable of recording beginning balances for any balance sheet accounts. This results in the absence of balances in the accounts on the balance sheet, therefore, financial decisions are being made based on incomplete data.
Finding 2024-003
Condition: Three of the twelve (25%) deposits tested had receipts that were not deposited within the three working day requirement. Criteria: Section 6-56-111(a). Tennessee Code Annotated, states: Every municipal official handling public funds shall be required to, as soon as practical, but no later than (3) working days after the receipt by such municipal official of any public funds, deposit the funds to the credit of such municipality’s office bank account, or bank accounts. Cause: The District is a small entity with limited resources including an office manager with no other office staff. Effect: This creates the possibility of misuse or loss of collections. Effect: Revenue figures may be inaccurate if receipts are not posted in a timely manner. This leads to discrepancies in reported revenue and impacts the reliability of financial reports, potentially resulting in misinformed business decisions.