Finding Text
Knott County Fiscal Court Did Not Maintain Proper FEMA Documentation
Federal Program: Assistance Listing #97.036 FEMA Public Assistance Program
Award Number and Year: FEMA-4663DRKYP00000001 2022
Name of Federal Agency and Pass-Thru Agency: U. S. Department of Homeland Security and State
Department of Military Affairs
Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of
Performance
Type of Finding: Material Weakness, Noncompliance
Amount of Questioned Costs: $1,212,805
COVID Related: No
Knott County had severe flooding in July of 2022. This event qualified Knott County Fiscal Court to receive
federal funding to recover from the disaster. Paperwork is maintained to document and track work that is
necessary and to determine the portion eligible for coverage by FEMA. The fiscal court did not maintain proper
FEMA documentation. Out of 36 disbursements tested, 11 did not have any accompanying information that
would detail the expected scope of work or cost. The 11 disbursements that did not have appropriate
documentation totaled $1,212,805 in questioned cost. The fiscal court has not sufficiently overseen the
expenditure of federal funds and did not prioritize the implementation of an effective internal control system.
Tracking of the FEMA projects was consistently executed on completed projects but was not available for the
in-progress projects that were tested.
The lack of documentation to appropriately connect the disbursements to FEMA authorized work resulted in the
determination that the county was not in compliance with the applicable attributes. An inaccurate implementation
of controls and the lack of management oversight and involvement can cause noncompliance with federal
requirements and jeopardize the fiscal court’s future funding. The lack of appropriate documentation also
prevented the ability to rely on supplementary information, such as the Schedule of Expenditures of Federal
Awards.
2 CFR part 200 Uniform Administrative Requirements, Cost Principles, And Audit Requirements For Federal
Awards provides guidance on Federal regulations pertaining to Federal Awards.
2 CFR 200.306, regarding cost sharing or matching, states that any shared costs or matching funds must meet
all of the following criteria: verifiable from the non-Federal entity’s records; not included as contributions for
any other Federal award; necessary and reasonable for accomplishment of project or program objectives;
allowable under subpart E of this part; not paid by the Federal Government under another Federal award except
where allowed; provided for in the approved budget when required by the Federal awarding agency; and conform
to other provisions of this part, as applicable.
2 CFR 200.318(i), regarding general procurement standards, requires Non-Federal entities to maintain records
sufficient to detail the history of procurement. These records will include, but are not limited to, the rationale for
the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the
contract price.
2 CFR 200.329, concerning monitoring and reporting program performance, states that the non-Federal entity is
responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must
monitor its activities under Federal awards to assure compliance with applicable Federal requirements and
performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program,
function, or activity.
We recommend the Knott County Fiscal Court implement adequate internal controls to ensure federal
compliance requirements are met. In addition, the fiscal court should maintain documentation for all project
activity to effectively track work that is necessary and to determine the portion eligible for coverage under
Federal programs.