TENNESSEE 4-H FOUNDATION, INC.Non-Profit

Financial Statement Audit Findings: 2020-001 Noncompliance with Reporting Compliance Requirement - Modified Cash Basis Presentation Assistance Listing 21.019 - COVID-19 Coronavirus Relief Fund Criteria or Specific Requirement ? State of Tennessee, as a pass-through entity for the Coronavirus Relief Funds, requires financial statements of subrecipients to be prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) under FASB. Condition ? The accompanying financial statements have been prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than GAAP. Cause ? Prior to 2020, the Tennessee 4-H Foundation, Inc. (the Foundation) was not subject to any reporting requirements which required GAAP reporting and the modified cash basis was suitable for the Foundation?s reporting needs and limited staff. Effect ? The Foundation?s current basis of financial reporting does not comply with requirements issued by the State of Tennessee, which is the pass-through entity for this grant. Recommendation ? If the Foundation plans to pursue additional state or federal funding, management should consider converting its accounting records to GAAP. Management Response ? See Part VI Corrective Action Plan. Single Audit Findings: Noncompliance with Reporting Compliance Requirement - Modified Cash Basis Presentation Assistance Listing 21.019 - COVID-19 Coronavirus Relief Fund Criteria or Specific Requirement ? State of Tennessee, as a pass-through entity for the Coronavirus Relief Funds, requires financial statements of subrecipients to be prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) under FASB. Condition ? The accompanying financial statements have been prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than GAAP. Cause ? Prior to 2020, the Tennessee 4-H Foundation, Inc. (the Foundation) was not subject to any reporting requirements which required GAAP reporting and the modified cash basis was suitable for the Foundation?s reporting needs and limited staff. Effect ? The Foundation?s current basis of financial reporting does not comply with requirements issued by the State of Tennessee, which is the pass-through entity for this grant. Recommendation ? If the Foundation plans to pursue additional state or federal funding, management should consider converting its accounting records to GAAP. Management Response ? See Part VI Corrective Action Plan.

Single Audit Findings: Significant Deficiency in Internal Controls over Compliance with Reporting Assistance Listing 21.019 - COVID-19 Coronavirus Relief Fund Criteria or Specific Requirement ? 2 CFR Section 200.303 states that a non-federal entity must establish and maintain effective internal control over the Federal award to provide reasonable assurance that the non-federal entity is in compliance with all requirements of the terms and conditions of the Federal award. The purpose of establishing internal controls over compliance is to ensure that instances of noncompliance are prevented or detected and corrected timely. Condition ? The Foundation did not develop or implement control activities, such as reviewing the Federal award and underlying laws and regulations for all applicable reporting requirements, creating a reporting calendar to track reporting deadlines and designating a knowledgeable person to review the prepared reports before submission. Cause ? As the Foundation never received grant funds which require compliance with this reporting requirement internal controls, the Foundation never developed or implemented internal controls over reporting. Effect ? The Foundation?s current basis of financial reporting does not comply with requirements issued by the State of Tennessee. In addition, without establishing appropriate control activities, the likelihood of noncompliance with reporting requirements applicable to future awards is greatly increased. Recommendation ? We recommend management evaluate existing controls and implement additional controls activities as necessary to identify all grant reporting requirements and consider establishing a reporting calendar to assist in tracking reporting deadlines and to create review and approval procedures for submitted reports. Management Response ? See Part VI Corrective Action Plan.