MISSISSIPPI HUMANITIES COUNCIL, INC.

2022-001 {ALN 45.129 Promotion of the Humanities Federal/State Partnership} Condition: During our review of the Schedule of Expenditures of Federal Awards (SEFA) and related financial statements, we noted that a significant portion of total subawards issued during the fiscal year were funded by federal programs. However, the corresponding Federal Financial Report (FFR) did not reflect any unliquidated obligations, despite the presence of a substantial subawards payable balance in the audited financial statements. Criteria: In accordance with 2 CFR §200.343 and Uniform Guidance requirements, recipients of federal funds must accurately report unliquidated obligations on the FFR to ensure complete and transparent financial reporting. Cause: The discrepancy resulted from a change in the organization’s bookkeeping practices and reporting methodology. Specifically, the organization transitioned from a cash basis to an accrual basis for preparing the FFR, which was not fully aligned with the timing and recognition of subaward obligations. Effect: This discrepancy may result in inaccurate reporting to federal agencies, which could lead to misunderstandings about the organization’s financial position and compliance with federal requirements. Recommendation: We recommend that the organization establish and implement procedures to ensure that subawards payable are properly reviewed and reconciled with the FFR prior to submission in line with the accrual method for reporting the FFR. This should include identifying and reporting any unliquidated obligations related to federal subawards. Views of Responsible Officials: The organization concurs with the finding and has since resubmitted the Federal Financial Report (FFR) to the federal agency to accurately reflect unliquidated obligations. Procedures are being developed to ensure future FFRs are reconciled with subawards payable balances prior to submission.

Finding: The FFR for the year ending October 31, 2022 did not accurately report unliquidated obligations to ensure complete and transparent financial reporting. Cause: MHC changed accountants and accounting software during 2022 and also moved from a cash basis to accrual basis for preparing the FFR. The total of Federal Expenditures in section 1 O of the FFR was correct but the Unliquidated Obligations line was not completed. Correction: A revised, corrected FFR was submitted in August 2024. Corrective Plan for Future Years: Subsequent FFRs have been prepared correctly. The accountant ensures that line 1 O.f. on the FFR reflects the payable balance as of October 31, 20xx for the grant.

2021-001 {ALN 45.129 Promotion of the Humanities Federal/State Partnership} Condition: The Council?s 2020 financial statements were not submitted to the Federal Audit Clearinghouse in timely manner. Criteria: In accordance with 2 CFT part 200 subpart F, the Council was required to submit their financial statement to the Federal Audit Clearinghouse by January 31, 2022. Cause: Policies and procedures did not identify the filing requirement to ensure a timely submission to the Federal Audit Clearinghouse. Effect: Submission was not made timely. Recommendation: The Council should submit their financial statements on a timely basis and adopt policies and procedures to ensure submissions remain timely. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding. Management will update internal controls to prevent this from occurring in the future.

Name of Contact Person: Stuart Rockoff, Executive Director Corrective Action: Management has put policies and procedures in place to ensure that the audit filed and follows the deadlines set to complete the audit. Anticipated Completion Date: Annually