Audit 389822

The Estill County Fiscal Court Failed To Implement Adequate Internal Controls Over Federal Programs Federal Program: Assistance Listing # 97.040 Chemical Stockpile Emergency Preparedness Program Award Number and Year: Multiple Years- CSEPP Grants Name of Federal Agency: United States Department of Homeland Security Pass Through Agency: Kentucky Department of Military Affairs Compliance Requirements: Allowable Costs/Cost Principles and Equipment and Real Property Management Finding: Material Weakness, Noncompliance Amount of Questioned Costs: None COVID Related: No The Estill County Fiscal Court did not establish and maintain effective internal controls over compliance with Chemical Stockpile Emergency Preparedness Program (CSEPP) requirements, resulting in the fiscal court being non-compliant with federal regulations. Additionally, during testing we noted one expenditure in the amount of $412,662 was not paid within 30 working days and there were 23 instances where equipment or property purchased was not added to the master inventory list as required. The master inventory list has not been updated since September 2022. The fiscal court believed that it had appropriate procedures in place and did not realize that they were not sufficient. As a result, there is an increased risk that the Estill County Fiscal Court is in noncompliance with the requirements that have a direct and material effect on CSEPP. 2 CFR § 200.303, titled Internal Controls, 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 or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, 2 CFR § 200.313(d)(2), states, “A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.” We recommend the fiscal court design and implement internal controls that ensure material compliance with applicable requirements for all federal awards.