Finding Text
Federal Program: COVID-19 – Coronavirus Relief Fund ALN 21.019 Award Number and Year: 2020 C019 Name of Federal Agency and Pass-Through Agency: U.S. Department of Treasury Passed-Through Kentucky Department for Local Government Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Type of Finding: Material Weakness Amount of Questioned Costs: None Effect on Audit Opinion: Disclaimer of Opinion COVID Related: Yes The Breathitt County Fiscal Court Failed To Implement And Maintain An Effective Internal Control Environment: The Breathitt County Fiscal Court’s current practices could create an environment for potential undetected material misstatements in the financial statements caused either by error or fraud. The noted weaknesses could affect the fiscal court’s ability to ensure that financial data is recorded, processed, and reported in an accurate and reliable manner and ensure that assets are sufficiently safeguarded. If the Breathitt County Fiscal Court continues these poor financial practices and does not improve the internal control structure, taxpayer monies will continue to be at risk. In addition, various local and state agencies that rely on and monitor the financial and program activity of the Breathitt County Fiscal Court cannot rely on, or have any confidence in, the reports submitted by the Breathitt County Fiscal Court. Proper accounting procedures and internal controls require that financial statements be supported with accurate underlying accounting records. Strong internal controls over financial reporting are vital in ensuring the fiscal court’s financial statement accurately reflects the financial activity of the fiscal court and ensures compliance with applicable state and federal laws and regulations. Additionally, complete, and accurate financial records can ensure expenditures are made only when sufficient funds are available, and receipts are properly recorded. In addition, 2 CFR 200.303 states in part, "[t]he 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.” We recommend the Breathitt County Fiscal Court provide sufficient management oversight of the day-to-day financial activities of the county. We further recommend the fiscal court improve its overall control environment in order to ensure sufficient accounting records are maintained to support transactions, accounts are reconciled, and bills are paid timely, and duties are adequately segregated to safeguard public assets. Only with a strong internal controls system can the fiscal court prepare and ensure that complete and accurate financial reports are completed and that the county is in compliance with each major federal