EIN: 616000831
UEI: SN8ZWALKFYA1
Audited by: Mike Harmon, Auditor of Public Accounts
Oversight agency: 97 [Department of Homeland Security]
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Data as of September 2, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on January 8, 2024. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by July 8, 2024 (791 days ago).
What is a management decision? →Federal Program: Assistance Listing # 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Award Number and Year: 4428 PW# 493 2019 Name of Federal Agency and Pass-Thru Agency (if applicable): U.S. Department of Homeland Security and Kentucky Emergency Management Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking; Period of Performance; Reporting; Special Tests & Provisions Type of Finding: (Material Weakness, Noncompliance) Amount of Questioned Costs: $236,464 Opinion Modification (if applicable): Disclaimer COVID Related: No The Breathitt County Fiscal Court Did Not Establish And Maintain Effective Internal Controls Over Compliance With FEMA Requirements: Federal Emergency Management Agency (FEMA) requirements. Purchase orders were not consistently used for the approval and tracking of federal expenditures. Transactions requiring bids were not presented to the fiscal court for approval. From the sample of 11 invoices tested there were nine instances of noncompliance and lack of controls over compliance regarding purchase orders and bid approvals. The deficiencies listed occurred due to lack of monitoring of controls, which diminishes the effectiveness of the controls put in place over disbursements by fiscal court. These deficiencies could create errors in recording or allow for the possibility of misappropriation of assets. Transactions were initiated without considering available line item balances and tracking with the use of a purchase order. Items requiring the bid process were not presented to the fiscal court for the approval of bids. Proper internal controls over expenditures are important to ensure purchase orders are created with sufficient funds available, include proper supporting documentation, and are paid in a timely manner. KRS 68.210 gives the state local finance officer the authority to prescribe a uniform system of accounts. Per the County Budget Preparation and State Local Finance Officer Policy Manual, issued by the Department for Local Government (DLG), “[p]urchases shall not be made without approval by the judge/executive (or designee), or a department head.” In addition, according to the fiscal court’s administrative code, transactions exceeding $20,000 are subject to the bidding process. We recommend fiscal court design and implement proper internal controls over compliance with federal program requirements and ensure they are operating effectively.
Show full finding ▾Hide full finding ▴Federal Program: Assistance Listing # 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Award Number and Year: 4428 PW# 493 2019 Name of Federal Agency and Pass-Thru Agency (if applicable): U.S. Department of Homeland Security and Kentucky Emergency Management Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking; Period of Performance; Reporting; Special Tests & Provisions Type of Finding: (Material Weakness, Noncompliance) Amount of Questioned Costs: $236,464 Opinion Modification (if applicable): Disclaimer COVID Related: No The Breathitt County Fiscal Court Did Not Establish And Maintain Effective Internal Controls Over Compliance With FEMA Requirements: Federal Emergency Management Agency (FEMA) requirements. Purchase orders were not consistently used for the approval and tracking of federal expenditures. Transactions requiring bids were not presented to the fiscal court for approval. From the sample of 11 invoices tested there were nine instances of noncompliance and lack of controls over compliance regarding purchase orders and bid approvals. The deficiencies listed occurred due to lack of monitoring of controls, which diminishes the effectiveness of the controls put in place over disbursements by fiscal court. These deficiencies could create errors in recording or allow for the possibility of misappropriation of assets. Transactions were initiated without considering available line item balances and tracking with the use of a purchase order. Items requiring the bid process were not presented to the fiscal court for the approval of bids. Proper internal controls over expenditures are important to ensure purchase orders are created with sufficient funds available, include proper supporting documentation, and are paid in a timely manner. KRS 68.210 gives the state local finance officer the authority to prescribe a uniform system of accounts. Per the County Budget Preparation and State Local Finance Officer Policy Manual, issued by the Department for Local Government (DLG), “[p]urchases shall not be made without approval by the judge/executive (or designee), or a department head.” In addition, according to the fiscal court’s administrative code, transactions exceeding $20,000 are subject to the bidding process. We recommend fiscal court design and implement proper internal controls over compliance with federal program requirements and ensure they are operating effectively.
The Breathitt County Fiscal Court has adopted the KY Model Procurement Code, effective in August 2023. In addition the Fiscal Court hired a new Applicant Agent in January 2023 and transitioned all FEMA related work to the in-house Applicant Agent in August of 2023 rather than contracting services through the Disaster Recovery firm the court had been working with prior to August 2023. With the hiring of the new Applicant Agent, proper bid documentation is being maintained & proper procedures are being followed for procurement of bids. The Breathitt County Fiscal Court has also changed the software used for tracking purchase orders which will allow for better tracking of both planned expenditures and already expended funds.
FAC accepted this audit on January 8, 2024 — management decision was due July 8, 2024.
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
Show full finding ▾Hide full finding ▴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
County Judge/Executive’s Response: The Breathitt County Fiscal Court has hired a new County Treasurer since the completion of the 2021 audit who will ensure stronger internal controls are maintained in her official capacity and will be working with additional staff members, such as the Finance Officer and Occupational Tax Administrator, to segregate duties in a more controlled method. The newly hired County Treasurer will work to resolve the following issues by the end of the calendar year in the following manner. Failure to perform accurate reconciliations - the new Treasurer has already begun to perform accurate reconciliations at the end of each month. Tax obligations not paid timely - the new Treasurer has already implemented a system for paying obligations by the deadline. Failure to maintain accounting records - the Former Treasurer began the process of reporting & record maintenance for the Justice Center Corporation Fund and the new Treasurer is continuing with this reporting method. This was implemented at the end of 2022. Failure to prepare financial statements timely - the new Treasurer will complete the annual statement in accordance with KRS 68.020 in a timely manner. Failure to prepare an accurate Schedule of Expenditures of Federal Awards (SEFA) - the new Treasurer will complete SEFA's accurately. Disbursements issues: o Segregation of duties is currently being reviewed and the new Treasurer is establishing a process for review and approval of disbursements that will allow for stronger internal controls. New system will be in place by the end of the calendar year. The Breathitt County Fiscal Court has also begun utilizing [software name redacted] as the primary accounting software which will allow for more consistent tracking of purchase orders and permit better tracking of obligated expenses. Supporting documentation will be kept for all transactions, including credit card transactions. Invoices will be paid in a timely manner - great strides have already been made in this area with the hiring of the new Treasurer but will continue to improve during the remainder of the calendar year 2023. The Breathitt County Fiscal Court adopted the KY Model Procurement code in August 2023. With the hiring of a new Applicant Agent in January 2023 and a new Treasurer in July 2023 proper bid documentation is already being maintained and procurement policies are being followed. An encumbrance list will be maintained by the new Treasurer. Payroll issues: o Annual pay rate lists will be maintained & approved at the first regular meeting of the Breathitt County Fiscal Court each January. New County Treasurer will ensure that payments moving forward do not exceed statutory maximums. All lump sum payments made to employees will be issued using W2's, moving forward, beginning in November 2023.
FAC accepted this audit on May 12, 2021 — management decision was due November 12, 2021.
Data source: This information comes from the Federal Audit Clearinghouse, the official repository of Single Audit data. All data is public domain. Verify this organization's audit history at fac.gov.
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