oversight

20-05. Audit of Grant CO-18951 Awarded to Sevier County, Tennessee

Published by the Appalachian Regional Commission, Office of Inspector General on 2020-03-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

APPALACHIAN REGIONAL COMMISSION
  OFFICE OF INSPECTOR GENERAL
      AUDIT OF GRANT AWARD
             Sevier County
         Sevierville, Tennessee




      Final Report Number: 20-05
       Grant Number: CO-18951

            December 2019




             Prepared by:

      Leon Snead & Company, P.C.
                                                   TABLE OF CONTENTS



                                                                                                                                          Page


Background ......................................................................................................................................1

Objective, Scope, and Methodology ................................................................................................1

Summary of Audit Results ...............................................................................................................2




                                                                        i
Background

Leon Snead & Company, P.C. completed an audit of grant number CO-18951 awarded by
the Appalachian Regional Commission (ARC) to Sevier County, Tennessee (the County). The
audit was conducted at the request of the ARC Office of Inspector General to assist the office in
its oversight of ARC grant funds.

ARC awarded $600,000 to the County and required a matching contribution of $1,727,660 for a
total estimated project cost of $2,327,660. The grant was subsequently amended to change the
matching contribution to $1,000,000, reducing the estimated project cost to $1,600,000. The
amendment increased the ARC cost share from 26% to 38% of project expenses. The period of
performance is May 1, 2017 through April 30, 2020. The project was physically completed but
the grant was not formally closed out.

The grant, Sevier County Imminent Threat, was awarded to extend 21,300 linear feet of water line
in two project areas. The water line extensions will provide greater interconnectivity and
comprehensive coverage within the Sevier County water system for the areas of Gatlinburg and
Pittman Center. Gatlinburg will include the installation of 8,000 linear feet of 8-inch water line
and a pump station for the Birds Creek area connection and the Pittman Center area connection
will include 12,300 linear feet of 8 and 6-inch water line.

ARC funds were made available through the Tennessee Department of Economic & Community
Development (TDECD). As the fiscal agent for Sevier County, TDECD administrated the grant
in accordance with a Memorandum of Understanding (MOU) between TDECD and ARC.

Objectives, Scope, and Methodology

The audit objectives were to determine whether: (1) program funds were managed in accordance
with the ARC and Federal grant requirements; (2) grant funds were expended as provided for in
the approved grant budget; (3) internal grant guidelines, including program (internal) controls,
were adequate and operating effectively; (4) accounting and reporting requirements were
implemented in accordance with generally accepted accounting principles (or other applicable
accounting and reporting requirements); and (5) the matching requirements and (6) the established
performance measures were met.

ARC funding of $593,100 had been expended and total matching contributions were $1,000,000.
We reviewed $431,636 of the ARC expenditures and $719,408 of the matching contributions to
determine whether they were properly supported and allowable.

We reviewed documentation provided by the County and interviewed personnel to obtain an
overall understanding of the grant activities, the accounting system, and general operating
procedures and controls. We reviewed written policies and administrative procedures to determine
if they complied with federal requirements and were adequate to administer the grant. We
reviewed financial and project performance reports to determine if they were submitted in
accordance with requirements. We evaluated grant results discussed in the project performance
reports to determine if the planned performance goals and objectives were met.




Leon Snead & Company, P.C.                      1
The on-site fieldwork was performed at the County's office in Sevierville, Tennessee during
the period of December 9 through December 13, 2019. The audit results were discussed with
County officials at the conclusion of the on-site visit.

The primary criteria used in performing the audit were 2 CFR 200, the ARC Code, the grant
agreement, and the MOU between ARC and TDECD. The audit was performed in accordance
with the Generally Accepted Government Auditing Standards.

Summary of Audit Results

The County’s administrative policies, procedures, and related internal controls were adequate to
manage the funds provided under the ARC grant. The ARC expenditures of $431,636 and the
match of $719,408 tested were properly supported and allowable. The County was on track to
fully meet the required matching contribution. Financial and project performance reports were
submitted to ARC timely and accurately.

We determined that the County had an adequate process in place for obtaining and recording data
related to the construction of the water lines. We compared the planned performance outputs and
outcomes with the actual performance outputs and outcomes, which were confirmed by the Project
Manager. This comparison is shown below.

                                           Planned       Actual          Planned        Actual
         Performance Measure
                                           Outputs       Outputs        Outcomes       Outcomes
  Linear Feet of Water Pipe Installed       21,300       18,917             0              0
  Households Served                          682          682               0              0
  Businesses Served                          140          140               0              0
  Households Improved                          0           0               682           682
  Businesses Improved                          0           0               140           140

Regarding the output of linear feet of water pipe installed, the County explained that the
contractors did not need as much pipe as initially planned, particularly on the Pittman Center part
of the project. The preliminary engineering report had the water line going to the creek bank. The
water line was stopped short of that point adjacent to Pittman School and saved some footage by
not going down the Pittman Center Road to its end versus crossing the creek earlier and not running
along the roadway.




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