MANAGEMENT'S CORRECTIVE ACTION PLAN - FISCAL YEAR 2022 Finding 2022-001: (21.027) Unallowable Activities/Allowance Costs and Cost Principals August 9, 2023 In July 2022, Arrowmont School of Arts and Crafts submitted a request for funds reimbursement under the Arts Recovery Program Grant (federal award #SLFRP5534) through the Tennessee Arts Commission. In the documentation justifying the request, an unallowable expense of $329.25 was included. The staff member who completed the request and the supporting documentation was knowledgeable about the federal regulation excluding alcohol purchases as eligible for reimbursement, however in reviewing and submitting the request, she did not notice that alcohol was included. The line item in error was a VISA bill that contained a purchase that included alcohol. There are a number of reasons this oversight occurred. The primary reason is human error. At the time the error occurred, Arrowmont had insufficient staff support for the function. There was only one staff member available to complete the request and supporting documentation. In addition to the volume of entries (approximately 1,000), the staff member who had COVID was working from home without access to the full database and on a very short timeline and therefor simply did not see the purchase which was at a restaurant as including alcohol. Corrective Action. Corrective action has been accomplished, effective April 2023. The need for grants management support staff has been identified and the position is in process to effectively manage all Arrowmont grants reporting. This position will work closely with the accounting staff to ensure the accuracy of reports and supporting documentation. Working with the accounting staff to review and double check the accuracy of each entry should preclude this error from re-occurring. Protocols include double checking any invoice that contains multiple entries to ensure compliance with financial/accounting and programmatic reporting. The Chief Officer for Institutional Advancement is responsible for ensuring that future requests and documentation are accurate, that staff are adequately trained, and that reports are checked carefully before submission. The Chief Finance Officer will also participate in grants management oversight to ensure all financial reports are accurate and correct. The Chief Executive Officer has additional oversight responsibility as necessary for all grants management reporting for Arrowmont. Upon notification from the auditors that an unallowable expense has been identified, the Chief Officer for Institutional Advancement called the Tennessee Arts Commission and notified them that an error had occurred and requested their guidance on how to proceed. The guidance was to provide the Director of Grants with Tennessee Arts Commission with this memo when corrective action was completed. This memo is being shared with PYA (Arrowmont auditors for 2022) and with Tennessee Arts Commission. In addition, to correct the $329.25 expense, Arrowmont will prepare and mail a refund check in this amount to Tennessee Arts Commission and will amend the 2022 budget reimbursement and the 2024 available budget reimbursement amounts. The contact person relative to this corrective action is: Trudy M. Hughes, Chief Executive Officer thughes@arrowmont.org (865) 368-8886 Thank you for the opportunity to submit this information. I welcome your response and direction regarding any further communication as is necessary. Sincerely, Trudy M. Hughes Trudy M. Hughes Chief Executive Officer