Audit 385202

2024-004: The Carter County Fiscal Court Did Not Establish And Maintain Adequate Internal Controls Over Compliance With CDBG requirements Federal Program: Assistance Listing #14.228 Community Development Block Grants/States’s Program And Non-Entitlement Grants In Hawaii The Carter County Fiscal Court Did Not Establish And Maintain Adequate Internal Controls Over Compliance With CDBG Requirements Federal Program: Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii Assistance Listing Number 14.228 Award Number and Year: Multiple Years Name of Federal Agency and Pass-Through Agency: U.S. Department of Housing and Urban Development / Kentucky Department for Local Government Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Special Tests & Provisions Type of Finding: Significant Deficiency Amount of Questioned Costs: $0 The Carter County Fiscal Court did not maintain all invoices and signed drawdown requests. However, this documentation was obtained later by the fiscal court from grant administrators and other sources. Invoices are required supporting documentation and should be reviewed before authorizing the drawdown and spending of federal awards. Drawdown requests are required to be maintained to document that the receipt of federal funds have been authorized. The fiscal court failed to review grant agreements to determine what required supporting documentation should have been maintained. The Carter County Fiscal Court, by not maintaining supporting documentation for review before authorizing the drawdown of federal funds, increases the risk federal funds could be spent on unallowable activities or unallowable costs, which would be a noncompliance of grant requirements. 2 CFR § 200.303 Internal Controls (Current as of June 30, 2024 ), states the non-Federal entity must: (a) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States (Green Book) or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). We recommend the Carter County Fiscal Court should review all grant agreements to determine the supporting documentation to be maintained, and review supporting documentation before authorizing the drawdown and spending of federal funds to ensure compliance with the grant program or contract requirements.