Finding Text
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.