Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: 211.180, 212.230, 212.240, 212.245, 212.890, 2
C.F.R. Part 200
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
194A.050(1) requires the
Cabinet for Health and Family Services to promulgate administrative regulations
necessary to qualify for federal funds.
KRS
211.170(1), (3), and (6)
require the cabinet to establish policies and standards of operation for
Kentucky's local public health departments. This administrative regulation
establishes minimum accounting and auditing requirements for Kentucky's local
public health departments.
Section 1.
Definitions.
(1) "Auditee" is defined by
2 C.F.R.
200.6.
(2) "GAAP" means generally-accepted
accounting principles.
(3)
"Government auditing standards" means the standards and guidance for auditors
and audit organizations who audit federal, state, and local government
programs, outlining the requirements for audit reports, professional
qualifications for auditors, and audit organization quality
control.
Section 2.
Accounting and Auditing Requirements.
(1)
(a) All recording by health departments in
the books of account and all financial reporting shall be performed in
accordance with:
1. This administrative
regulation;
2. Cash or modified
accrual accounting procedures as approved by the Department for Public
Health;
3. 2 C.F.R. Part 200 ;
and
4. GAAP.
(b) If GAAP conflicts with policies
established in this administrative regulation, the local health department
shall follow policies established in this administrative regulation.
(2) Each local health department
shall be audited by a certified public accountant after the close of every
fiscal year to assure receipts and expenditures have been properly authorized,
recorded, and reported.
(a) The following
items shall be audited:
1. Federal, state, and
local funds and fees received and expended; and
2. Books, accounts, and other financial
documentation, by cost center.
(b) An audit shall be conducted in accordance
with:
1. GAAP; and
2. Government auditing standards.
(c) The audit of a local health
department expending $750,000 or more in federal funds shall be conducted in
accordance with:
1. Paragraph (b) of this
subsection; and
2. The provisions
of 2
C.F.R. 200.500-200.520.
(d) The following reports shall be provided
to the local health department and the Department for Public Health:
1. Auditor's opinion on the financial
statements and on the schedule of expenditures of federal awards, as required
by
2
C.F.R. 200.515(a);
2. Statement of assets, liabilities, and fund
balance;
3. Statement of revenues
and expenditures by cost center;
4.
Statement of changes in fund balance;
5. Comparative schedule of budgeted to actual
operating revenues and expenditures by cost center;
6. Audit adjustments, or a statement that an
adjustment is not required;
7.
Schedule of expenditures of federal awards, as required by
2 C.F.R.
200.510(b);
8. Report on compliance and on internal
control over financial reporting based on an audit of financial statements
performed in accordance with government auditing standards;
9. Single audit report on compliance with
requirements applicable to each major program and on internal control over
compliance in accordance with
2
C.F.R. 200.515(b);
10. Schedule of findings and questioned
costs, in accordance with
2
C.F.R. 200.515(d), including
the status of an uncorrected finding from a prior audit;
11. A summary of the auditor's results, in
accordance with
2
C.F.R. 200.516;
12. Auditee's corrective action plan;
and
13. Auditee letter:
a. Describing an internal control or
compliance deficiency not a reportable condition; and
b. Referenced in the auditor's report on
internal control and compliance.
(3) The reports described in subsection
(2)(d) of this section shall be presented as prescribed by the American
Institute of Certified Public Accountants Statement of Position 98-3, Audits of
States, Local Governments, and Not-for-Profit Organizations Receiving Federal
Awards, and subsequent amendments, except that a written auditee letter is
required when internal control and compliance deficiencies are determined not
to be reportable conditions.
(4) A
report shall contain all reportable conditions, with those reportable
conditions that are considered material weaknesses being appropriately
segregated and identified. Any other matters conveyed to the auditee shall be
in writing in the auditee letter, and shall be discussed during the exit
conference. Reportable conditions presented as part of the reports shall be
well developed and shall consist of the following components, to the extent
practicable:
(a) A statement of
condition;
(b) The criteria for the
reportable condition;
(c) The cause
of the condition;
(d) The effect of
the condition;
(e) A recommendation
for correction; and
(f) Auditee's
response and corrective action plan.
(5) If applicable, the audit firm shall
report on:
(a) Uncorrected comments reported
in the preceding audit;
(b) The
status of prior-year questioned costs, whether resolved with the federal
grantor or unresolved; and
(c)
Questioned costs from the preceding audit and any unresolved questioned costs
from prior years.
(6) The
audit firm shall report immediately, in writing, to the Commissioner of the
Department for Public Health, any fraud, irregularity, illegal act, or
indication of an illegal act of the auditee, that comes to its attention during
the audit proceedings.
(7) A vendor
selected to conduct a local health department audit shall meet criteria
provided in the request for proposal instructions provided by the Department
for Public Health.
Section
3. Internal Control Procedures.
(1) A local health department shall have
written internal control procedures that shall be followed by the local health
department. The chief executive officer, senior local health department
management official, or other staff shall notify the Department for Public
Health immediately if evidence of possible fraud or mismanagement is
discovered.
(2) A local health
department shall use an automated financial accounting system approved by the
Department for Public Health.
(3)
Local health departments shall submit all financial reports to the Department
for Public Health in accordance with the instructions provided by the
department
STATUTORY AUTHORITY:
KRS
194A.050(1),
211.170(1),
(3),
(6)