FRANKLIN COUNTY AREA DEVELOPMENT CORPORATION

2020-002 - Reporting Economic Development Cluster CFDA # 11.300 and 11.307 Grant Period: 2020 U.S. Department of Commerce, Economic Development Administration Criteria: Form ED-209, Revolving Loan Fund Financial Report, is required to be completed based upon RLF recipient?s financial documents and account balances. Condition: During our audit, we noted that various key line items of the Form ED-209 do not reconcile to the Corporation?s financial documents and account balances. Context: The Corporation?s Form ED-209 does not agree to the Corporation?s financial documents and account balances. Cause: The Form ED-209 is to report cumulative amounts, originating from the start of the Revolving Loan Fund. The Revolving Loan Fund first began in 1996. Although the Revolving Loan Fund activity was monitored and tracked through the Corporation?s financial system, the reporting requirements were not the same as they are currently. For this reason, much of the information which has since been requested cannot be re-created in the same format, for such a historic point in time. Anytime an error occurs on the Form ED-209, the error will continue to carry into each report in the future. Upon further review of the 2020 activity, calculated by change in reports from year-end 2019 to 2020, various amounts were inadvertently omitted from inclusion in the 2020 activity. This omission included two new loans issued during 2020. For these reasons, some of the Form ED-209 does not accurately reflect the financial documents and account balances. Effect: The lack of compliance with grant requirements could result in a reduction in termination of the Revolving Loan Fund. Questioned Costs: None. Repeat Finding: This was a repeat finding from the 2019 audit shown as 2019-003. Recommendation: The Corporation should continue to work with the Economic Development Administration to correct the cumulative balance reported within the Form ED-209 in order to reflect the Corporation?s financial documents and account balances. Views of responsible officials and planned corrective action: The Corporation has responded to this finding in the Corrective Action Plan, which is a part of this reporting package.

2020-003 - Allowable Cash Percentage Economic Development Cluster CFDA # 11.300 and 11.307 Grant Period: 2020 U.S. Department of Commerce, Economic Development Administration Criteria: Allowable Cash Percentage for awards administered by the Philadelphia Regional Office for calendar year 2020 is 36.20%. The Corporation must ensure that Revolving Loan Fund (RLF) Capital Base maintained as RLF Cash Available for Lending is at or below the allowable percentage. Condition: During our audit, we noted that the Corporation?s allowable cash percentage at December 31, 2020 was 66.23%. Context: The Corporation has a RLF to lend to eligible applicants. Part of having the fund requires the Corporation to hold only a certain percentage of its capital base as cash. Cause: The RLF principal outstanding on loans is low in comparison to the RLF capital base, causing a higher balance of cash available for lending. Effect: RLF awards with more than 50% of the Capital Base held as Cash Available for Lending for more than twenty-four months may be subject to partial termination of the award. Questioned Costs: None. Repeat Finding: This was a repeat finding from the 2019 audit shown as 2019-004 and the 2018 audit as shown 2018-003. Recommendation: The Corporation should strive to reduce the allowable cash percentage through additional revolving loans. Views of responsible officials and planned corrective action: The Corporation has responded to this finding in the Corrective Action Plan, which is a part of this reporting package.

2019-002 - Report Submission Criteria: 2 CFR 200.512 of the Uniform Guidance states the audit shall be completed and the data collection form and reporting package shall be submitted within the earlier of 30 days after receipt of the auditor?s report(s), or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. Condition: Franklin County Area Development Corporation did not timely file the data collection form and reporting package within the specified time period required under the Uniform Guidance. Context: One of the steps in assessing auditee risk is to assess whether the previous year?s data collection form and reporting package was timely filed with the Federal Audit Clearing House. The results of our tests disclosed the Data Collection Form and reporting package was filed more than nine months after year end. Cause: Due to a misunderstanding producing a late start of the audit, Franklin County Area Development Corporation, was unable to submit its December 31, 2018, audit within the time period required under the Uniform Guidance. Effect: Franklin County Area Development Corporation has not complied with the reporting requirements of Uniform Guidance. As a result, it has placed itself at risk to not be eligible for future grant awards. Questioned Costs: None Repeat Finding: This was not a repeat finding.

2019-003 - Reporting Economic Development Cluster CFDA # 11.300 and 11.307 Grant Period: 2019 U.S. Department of Commerce, Economic Development Administration Criteria: Form ED-209, Revolving Loan Fund Financial Report, is required to be completed based upon RLF recipient?s financial documents and account balances. Condition: During our audit, we noted that various key line items of the Form ED-209 do not reconcile to the Corporation?s financial documents and account balances. Based upon further review, it appears that Form ED-209 cannot be accurately stated due to the cumulative nature of the form. Context: The Corporation?s Form ED-209 does not agree to the Corporation?s financial documents and account balances. Cause: The Form ED-209 is to report cumulative amounts, originating from the start of the Revolving Loan Fund. The Revolving Loan Fund first began in 1996. Although the Revolving Loan Fund activity was monitored and tracked through the Corporation?s financial system, the reporting requirements were not the same as they are currently. For this reason, much of the information which has since been requested cannot be re-created in the same format, for such a historic point in time. Additionally, anytime an error occurs on the Form ED-209, the error will continue to carry into each report in the future. For these reasons, some of the Form ED-209 does not accurately reflect the financial documents and account balances. Effect: The lack of compliance with grant requirements could result in a reduction in termination of the Revolving Loan Fund. Questioned Costs: None. Repeat Finding: This was not a repeat finding.

2019-004 - Allowable Cash Percentage Economic Development Cluster CFDA # 11.300 and 11.307 Grant Period: 2019 U.S. Department of Commerce, Economic Development Administration Criteria: Allowable Cash Percentage for awards administered by the Philadelphia Regional Office for calendar year 2019 is 33.80%. The Corporation must ensure that Revolving Loan Fund (RLF) Capital Base maintained as RLF Cash Available for Lending is at or below the allowable percentage. Condition: During our audit, we noted that the Corporation?s allowable cash percentage at December 31, 2019 was 64.32%. Context: The Corporation has a RLF to lend to eligible applicants. Part of having the fund requires the Corporation to hold only a certain percentage of its capital base as cash. Cause: The RLF principal outstanding on loans is low in comparison to the RLF capital base, causing a higher balance of cash available for lending. Effect: RLF awards with more than 50% of the Capital Base held as Cash Available for Lending for more than twenty-four months may be subject to partial termination of the award. Questioned Costs: None Repeat Finding: This was a repeat finding from the 2018 audit as shown 2018-003.

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