oversight

Audit of Community Service and Other Grants Awarded to Arkansas Educational Television Commission (AETC), Conway, Arkansas, for the Period July 1, 2018 through June 30, 2020

Published by the Corporation for Public Broadcasting, Office of Inspector General on 2021-03-31.

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

    CORPORATION FOR PUBLIC BROADCASTING
      OFFICE OF THE INSPECTOR GENERAL




AUDIT OF COMMUNITY SERVICE AND OTHER GRANTS
AWARDED TO ARKANSAS EDUCATIONAL TELEVISION
    COMMISSION (AETC), CONWAY, ARKANSAS
FOR THE PERIOD JULY 1, 2018 THROUGH JUNE 30, 2020



             REPORT NO. AST2008-2104



                 MARCH 31, 2021
                      Office of the Inspector General                        Report No. AST2008-2104
                      Corporation for Public Broadcasting                              March 31, 2021
                      Report in Brief

Why We Did This Audit             Audit of Community Service and Other Grants Awarded to Arkansas
                                  Educational Television Commission (AETC), Conway, Arkansas, for
We performed this audit based     the Period July 1, 2018 through June 30, 2020
on our Annual Plan to audit
public television and radio       What We Found
stations.                         Based on our audit, AETC was        AETC did not fully comply with Act
                                  not compliant with the              and General Provisions
Our objectives were to examine    following CPB grant                 requirements and incurred
AETC’s certifications of          requirements. Specifically,         questioned grant costs of $11,650.
compliance with Corporation       AETC:
for Public Broadcasting (CPB)
grant terms to: a) claim Non-      •   did not fully comply with Act and General Provisions and
Federal Financial Support              Eligibility Criteria (General Provisions) requirements for open and
(NFFS) on its Annual Financial         closed meetings, open financial records, and making the
Reports (AFR) in accordance            Employment Statistical Report and Local Content and Service
with CPB Financial Reporting           Report available to the public;
Guidelines; b) expend grant        •   incurred $11,650 in questioned production grant costs and was
funds in accordance with grant         noncompliant with other grant reporting requirements; and
agreement requirements; and c)     •   had AFR reporting errors.
comply with the Certification
of Eligibility requirements and   In response to the draft report, AETC management agreed with most of
the statutory provisions of the   our findings and recommendations and said it has implemented
Communications Act of 1934,       corrective actions to ensure future compliance. CPB management will
as amended (Act). The amount      make the final determination on our findings and recommendations.
of NFFS a station reports to
CPB affects the amount of CPB     What We Recommend
funding the station receives.     We recommend that CPB management require AETC to:

                                   •   fully comply with Act and General Provisions requirements for
                                       open meeting advance notices, reasons for closing meetings, open
                                       financial records, and making the Employment Statistical Report
                                       and Local Content and Service Report available to the public;
                                   •   repay the questioned costs of $11,650;
Send all inquiries to our          •   establish a Grantee-Developed method approved by CPB for
office at (202) 879-9669 or            calculating indirect administrative support (IAS) reported on AFR
email OIGemail@cpb.org or              Schedule B; and
visit www.cpb.org/oig              •   identify the corrective actions it will implement to ensure future
                                       compliance with Act and General Provisions requirements, CPB
Listing of OIG Reports                 AFR reporting, and other CPB production grant budget,
                                       recordkeeping, and reporting requirements.
                                                                        Office of the Inspector General




Date:               March 31, 2021

To:                 Jackie J. Livesay, Vice President, Compliance
                    Michael Levy, Executive Vice President and Chief Operating Officer
                    Stephanie Aaronson, Senior Vice President, Engagement
                                                                         Digitally signed by
From:               Kimberly A. Howell, Inspector General                Kimberly Howell
                                                                         Date: 2021.03.31
                                                                         15:56:50 -04'00'

Subject:            Audit of Community Service and Other Grants Awarded to Arkansas Educational
                    Television Commission (AETC), Conway, Arkansas for the Period July 1, 2018
                    through June 30, 2020, Report No. AST2008-2104

Enclosed please find our final report which contains our findings and recommendations. CPB
officials must make a final management decision on the findings and recommendations in
accordance with established audit resolution procedures.

Accordingly, we request that you provide us with a draft written response to our findings and
recommendations within 90 days of the final report. We will review your proposed actions and
provide our feedback before you issue a final management decision to the grantee, which is due
within 180 days of the final report. For corrective actions planned but not completed by the
response date, please provide specific milestone dates so that we can track the implementation of
corrective actions needed to close the audit recommendations.

We will post this report to the Office of the Inspector General’s website and oversight.gov, as
well as distribute to appropriate Congressional committees as required by the Inspector General
Act of 1978, as amended. Please refer any public inquiries about this report to our website or our
office.

Enclosure

cc:       Bruce M. Ramer, Chair, CPB Board of Directors
          Robert Mandell, Chair, Audit and Finance Committee, CPB Board of Directors
          U.S. Senate Committee on Homeland Security and Governmental Affairs
          U.S. House of Representatives Committee on Oversight and Government Reform
          U.S. Senate Committee on Commerce, Science and Transportation
          U.S. House of Representatives Energy and Commerce Committee

401 Ninth Street, NW
Washington, DC 20005-2129
202.879.9669 202.879.9699 fax
www.cpb.org/oig
          U.S. Senate Committee on Appropriations
          U.S. Senate Labor-HHS-Education Appropriations Subcommittee
          U.S. House of Representatives Committee on Appropriations
          U.S. House of Representatives Labor-HHS-Education Appropriations Subcommittee




401 Ninth Street, NW
Washington, DC 20005-2129
202.879.9669 202.879.9699 fax
www.cpb.org/oig
                                                  TABLE OF CONTENTS


EXECUTIVE SUMMARY ............................................................................................................ 1
BACKGROUND ............................................................................................................................ 2
RESULTS OF REVIEW................................................................................................................. 3
FINDINGS AND RECOMMENDATIONS................................................................................... 4
   I.    ACT and GENERAL PROVISIONS COMPLIANCE........................................................ 4
   II. VETERANS COMING HOME - QUESTIONED PRODUCTION COSTS ...................... 9
   III. AFR REPORTING ERRORS ............................................................................................ 13
Exhibit A - CPB Payments to AETC ............................................................................................ 18
Exhibit B - AETC-TV Annual Financial Report .......................................................................... 19
Exhibit C - AETC-TV Summary of Non-Federal Financial Support ........................................... 32
Exhibit D - Veterans Coming Home: Finding What Works - AETC ........................................... 33
Exhibit E - Scope and Methodology ............................................................................................. 35
Exhibit F - AETC Response to Draft Report ................................................................................ 36




401 Ninth Street, NW
Washington, DC 20005-2129
202.879.9669 202.879.9699 fax
www.cpb.org/oig
                                      EXECUTIVE SUMMARY

We have completed an audit of the Corporation for Public Broadcasting (CPB) Community
Service Grants (CSG) and other grants awarded to the Arkansas Educational Television Network
(AETN), 1 licensed to the Arkansas Educational Television Commission (AETC), for the period
July 1, 2018 through June 30, 2020. 2 Our objectives were to examine AETC’s certifications of
compliance with CPB grant terms to: a) claim Non-Federal Financial Support (NFFS) on its
Annual Financial Reports (AFRs) in accordance with CPB Financial Reporting Guidelines
(Guidelines); b) expend grant funds in accordance with grant agreement requirements; and
c) comply with the Certification of Eligibility requirements and the statutory provisions of the
Communications Act of 1934, as amended (Act).

Our audit found that AETC generally complied with CPB requirements except AETC:

    •   did not fully comply with Act requirements for open and closed meetings, open financial
        records, and making its Employment Statistical Report available to the public;
    •   did not fully comply with General Provisions and Eligibility Criteria (General Provisions)
        transparency requirements for making its Local Content and Service Report available to
        the public;
    •   incurred $11,650 in questioned production grant costs and was noncompliant with other
        grant budget, recordkeeping and reporting requirements; and
    •   had AFR reporting errors.

We recommend that CPB management require AETC to:

    •   fully comply with Act and General Provisions requirements for open meeting advance
        notices, reasons for closing meetings, open financial records, and making its Employment
        Statistical Report and Local Content and Service Report available to the public;
    •   repay questioned costs of $11,650;
    •   comply with CPB requirements to address budget changes, maintain project records
        to account for all revenues and expenses, maintain contemporaneous labor records,
        and submit final reports reconcilable to the general ledger to permit an effective audit;
    •   establish a Grantee Developed method approved by CPB for calculating indirect
        administrative support (IAS) reported on AFR Schedule B; and
    •   identify the corrective actions it will implement to ensure future compliance with Act and
        General Provisions requirements, CPB AFR reporting, and other CPB production grant
        budget, recordkeeping, and reporting requirements.

In response to the draft report, AETC management agreed with most of our findings but did not
agree that its Employment Statistical Report and Local Content and Service Report were not
available to the public. The station agreed with our findings on the production grant and said

1
  Officially renamed in February 2020 as Arkansas PBS. For our audit report, we refer to the state commission
AETC as the grantee.
2
  We reported on Communications Act and CPB General Provisions compliance through the date we completed our
audit fieldwork.



                                                      1
that all grant funds were properly spent on grant activity; the station did not specifically
address the repayment of questioned costs in its response. Station management said they have
taken correction actions to ensure its compliance with CPB Act and grant requirements.

Based on AETC management’s response to the draft audit report, we consider
recommendations one and two resolved but open pending CPB’s final management decisions
resolving the audit findings and acceptance of the station’s corrective action. We consider
recommendations three through seven unresolved pending CPB’s final determination on our
findings. The station’s response is summarized after each finding and the complete response is
presented in Exhibit F.

This report presents the conclusions of the Office of the Inspector General (OIG) and the
findings do not necessarily represent CPB’s final position on the issues. While we have made
recommendations that are appropriate to resolve the findings, CPB officials will make final
determinations on our findings and recommendations in accordance with established CPB audit
resolution procedures.

We conducted our audit in accordance with Government Auditing Standards for attestation
examination engagements. Our scope and methodology are discussed in Exhibit E.

                                       BACKGROUND

AETC (the “Commission) operates as part of the Division of Elementary and Secondary
Education, a commission of the Arkansas State government and licensee of AETN/Arkansas
PBS. The network operates non-commercial television channels and public media throughout
the state. Information on the station’s website myarkansaspbs.org states:

   Arkansas PBS is the only statewide public media network, which enhances lives by
   providing lifelong learning opportunities for people of all walks of life. The station
   provides PBS programming, local and other productions through multiple platforms
   including on-demand services on YouTube TV, and Arkansas PBS, Create, Arkansas
   PBS KIDS, Arkansas PBS World, and Arkansas PBS AIRS on SAP. Arkansas PBS is
   broadcast on KETS (Little Rock), KEMV (Mountain View), KETG (Arkadelphia),
   KAFT (Fayetteville), KTEJ (Jonesboro) and KETZ (El Dorado).

The Arkansas Educational Telecommunication’s Network Foundation (AETNF) is a non-profit
Arkansas corporation formed in 1984 to obtain, hold, invest, reinvest, and administer funds and
other property for the benefit of AETC. AETNF is not considered a component unit of AETC
and presents separate audited financial statements that are not included in the AETC audited
financial statements. Both organization’s audited financial statements are combined and reported
as a separate schedule to the AETC audited financial statements and are the combined source for
CPB AFR reporting. Our audit work included the review of underlying financial data from both
entities.




                                               2
CPB’s Community Service Grant Program

The Act provides that specific percentages of the appropriated funds CPB receives annually
from the United States Treasury must be allocated and distributed to licensees and permittees
of public TV and radio stations. After funds are designated as either TV or radio funds, the
funds are placed in the appropriate CSG grant pool for distribution to eligible stations. TV
funds can be distributed only to TV stations and radio funds must go to radio stations.

Each year CPB awards CSG grants to public TV and radio stations based in part on the amount
of NFFS claimed by all stations on their AFRs. The CSG calculation process starts with
separate amounts appropriated for the TV and radio CSG pools adjusted by base grants and
supplemental grants. The funds that remain are called the Incentive Grant Pools; one is for TV
and the other is for radio.

The Incentive Rate of Return (IRR) is separately calculated for television and radio grantees.
This is done by dividing the Incentive Grant Pools by the total adjusted NFFS claimed by all
television grantees for the television IRR and by all radio grantees for the radio IRR. The IRR is
then multiplied by each grantee’s adjusted NFFS in various tiers to calculate the incentive award
amount of its total CSG. There is a two-year lag between the reported NFFS and CPB’s
calculation of the fiscal year’s (FY’s) CSG amount. For example, CPB used the NFFS reported
by AETC on its FYs 2017 and 2018 AFRs to determine the amount of the TV CSG funds the
station received in FYs 2019 and 2020.

As shown in Exhibit A, AETC received CSG and other grant funds totaling $4,458,528
($2,151,204 in FY 2019 and $2,307,324 in FY 2020) from CPB. The station reported NFFS of
$23,336,171 ($11,828,010 in FY 2019 and $11,508,161 in FY 2020) as shown in Exhibit C.
AETC’s audited financial statements for the two fiscal years we audited reported total support
and revenues of $14,233,772 in FY 2019 and $14,420,424 in FY 2020. AETC’s fiscal year
begins July 1 and ends June 30.

                                   RESULTS OF REVIEW

In our opinion, AETC generally complied with CPB requirements except for the specific
requirements as summarized in the following paragraph for the FYs 2019 and 2020 grant
reporting as examined in Exhibits B and D. We reviewed AETC management’s assertions of
compliance with CPB grant requirements: a) CSG Certification of Eligibility; b) CSG Legal
Agreement; c) AFR Signature Page; and d) other production grant requirements. The CSG
Certification of Eligibility includes AETC’s compliance with AFR/NFFS reporting in
accordance with CPB’s Guidelines; Act requirements for open and closed meetings, open
financial records, equal employment opportunity (EEO) reporting, and donor lists; use of CPB
funds; and accounting requirements. Our responsibility is to express an opinion on
management’s assertions about its compliance based on our examination.




                                                3
Our audit found that AETC generally complied with CPB requirements except AETC:

   •   did not fully comply with Communications Act requirements for open and closed
       meetings, open financial records, and making its Employment Statistical Report available
       to the public;
   •   did not fully comply with General Provisions transparency requirements for making its
       Local Content and Service Report available to the public;
   •   incurred $11,650 in questioned production grant costs and was noncompliant with other
       grant recordkeeping and reporting requirements; and
   •   had AFR reporting errors.

Our audit was conducted in accordance with the Government Auditing Standards for attestation
examination engagements and, accordingly, included examining, on a test basis, evidence about
AETC’s compliance with CPB’s requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our examination provides a
reasonable basis for our opinion. However, it does not provide a legal determination on AETC’s
compliance with specified requirements.

                         FINDINGS AND RECOMMENDATIONS

I. ACT and GENERAL PROVISIONS COMPLIANCE

Our audit found that AETC was not fully compliant with Act requirements for open meeting
advance notices, closed meeting explanations, open financial records, and General Provisions
Transparency requirements as discussed further below.

Based on our review of AETC’s website, central office public files, and other supporting
documentation reviewed for our audit period, we found that AETC was not fully compliant with
the following Communications Act and/or Transparency grant requirements to ensure required
information was available to the public. The following specific requirements were not met for
the two CSG grants audited.

   •   Seven-day advance notice for open public meetings of the AETC governing board
       (Commission) and executive committee of the Commission.
   •   Closed meeting requirement to make available to the public a document explaining the
       specific reasons for closing meetings to the public within 10 days of the meeting.
   •   Posting the most recent audited financial statements on the station’s website.
   •   Posting the most recent CPB AFR on the station’s website.
   •   Making the station’s Employment Statistical Report and Local Content and Service
       Report available to the public.

   Open Meetings

AETC did not fully comply with CPB’s open meetings requirements to provide seven-day
advance notice for public meetings of the Commission and Executive Committee, for 5 of 19
meetings reviewed during our audit period. The Act requires that stations provide reasonable



                                               4
advance notice of open meetings to the public. CPB has interpreted reasonable advance notice as
follows in its Compliance 2019 document:

   E. Notice of Open Meetings: The Act requires stations to provide the public with
   reasonable advance notice of an Open Meeting. Stations may satisfy that requirement by
   providing at least seven days’ advance notice of an Open Meeting, including the time and
   place of the meeting, by:

   1. posting notice on the station website;
   2. broadcasting notice on-air between 6 a.m. and 11 p.m., as shown by the station’s log;
   3. placing notice in the “Legal Notices” section of a local newspaper in general
      circulation in the station’s primary coverage area; or
   4. giving notice through a recorded announcement accessible on the station’s phone
      system.

According to station financial officials, AETC’s regularly scheduled meetings (Quarterly
Commission Meetings) follow the State of Arkansas Administrative Procedures Act which
requires notice of Commission meetings at least three days in advance which include the date,
time, and location of the meeting. This notice is to be made on 1) www.arkansas.gov; and 2) the
agency website. Additionally, the Arkansas Freedom of Information Act requires state entities to
provide the time and place of a meeting to anyone who requests. While four of the five non-
compliant meetings met the state notice requirements, a total of five of 19 meetings did not meet
the CPB’s seven-day advance notice requirements.

In June 2019, management performed a review of its open meetings process to ensure its
compliance with both CPB and State open meeting requirements. Management determined that
because the Communications Act requires more days advanced notice, they recommended that
seven days in advance of the meeting be the standard for providing notice of regularly scheduled
meetings. Personnel responsible for communicating with the Public Information Office to
ensure the meeting notices were timely and got posted to the website were informed of the
change. However, management explained that AETC had substantial turnover in the department
responsible for the advance notices and some lapses occurred in timely posting information to
the website even after the process was revised.

Management acknowledges some lapses in full compliance with CPB open meeting notice
requirements and asserts AETC has put procedures in place to ensure its future compliance.

AETC was not in full compliance with Act requirements during our audit period and may be
subject to penalties under CPB’s CSG Non-Compliance policy.

   Closed Meetings

Explanations for closed meetings were not available to the public on the station’s website or
made available to the public for two of six closed executive committee meetings or closed
portions of a meeting. The minutes from a third closed meeting provided an adequate
explanation, but we could not determine if the reasons were made available to the public



                                                5
within the 10-day notice period. In addition, for 3 of the 19 open meetings reviewed,
meeting minutes were not available, therefore we could not determine if any portion of those
meetings were closed and would have required a closed meeting statement.
CPB’s Compliance 2019 document requires the following:

   C. Closed Meeting Documentation: The Act requires stations to document and make
   available to the public the specific reason(s) for closing a meeting within a reasonable
   time after the meeting. CPB also requires that the written statement be made available
   for inspection, either at the CSG recipient’s central office or posted on its station website,
   within 10 days after each closed meeting.

Station management did not employ a consistent process to provide the public with closed
meeting notices. Sometimes the reason for closing a portion of a meeting was included in the
advance open meeting notice and posted to the website; other times the explanation was included
in the meeting minutes, and other times the explanation was not included in the minutes.

During our fieldwork, management assessed its process for providing the public with the reasons
for closing a meeting or session of a meeting. AETC is updating its procedures to ensure future
compliance with CPB requirements.

AETC was not in full compliance with CPB requirements for providing the public with the
reasons for closing meetings during our audit period and may be subject to penalties under
CPB’s CSG Non-Compliance policy.

   Website Not Updated with FY 2019 Financial and other Information

During our audit, we reviewed the station’s website and found that it did not include the station’s
most recent FY 2019 financial information, employment statistics, and Local Content and
Service Report (LCSR). The information available on the website was only for FY 2018.
Further, the employment statistics and LCSR were not readily available at the central office
when requested.

       Audited Financial Statements and Annual Financial Report

The most recent audited financial statements and Annual Financial Report (AFR) for FY 2019
were not posted on the station’s website.

CPB’s Compliance 2019 document requires the following:

   E. The Public’s Access to Financial Information: The Act requires station to make
   available to the public their annual financial and audit reports and other financial
   information they are required to provide to CPB. CPB General Provisions also require
   that each CSG recipient post the following documents on its station website:

       1. its most recent audited financial statement or un-audited financial statement for
          stations exempt from providing audited financial statements;



                                                 6
       2. its most recent annual financial report (AFR) or annual financial summary report
          (FSR) (whichever is applicable).

AETC’s audited financial statements and AFRs for previous years appear on the station’s
website. When we started our fieldwork in September 2020, we found only the FY 2018 audited
financial statements and AFR which were not the most recent reports.

       Employment Statistical Report - Equal Employment Opportunity (EEO)

The station’s Employment Statistical Report was not available to the public on the station’s
website or readily available at its central office when requested.

CPB’s Compliance 2019 document requires the following:

   A. EEO Legislation: The EEO requirements of the Communications Act are as
   follows: …

   (B) A licensee or permittee of any public broadcast station with more than five
   full-time employees is required to file annually with the Corporation a
   statistical report, consistent with reports requirements by Commission
   regulation, identifying by race and sex the number of employees in each of
   the following full-time and part-time job categories:

       (i)      Officials and managers.
       (ii)     Professionals.
       (iii)    Technicians.
       (iv)     Semiskilled operatives.
       (v)      Skilled craft persons.
       (vi)     Clerical and office personnel.
       (vii)    Unskilled operatives.
       (viii)   Service workers.

   (C) In addition, such report shall state the number of job openings occurring
   during the course of the year. Where the job openings were filled in
   accordance with the regulations described in subparagraph (A) (i), the report
   shall so certify, and where the job openings were not filled in accordance with
   such regulations, the report shall contain a statement providing reasons
   therefor. The statistical report shall be available to the public at the central
   office and at every location where more than five full-time employees are regularly
   assigned to work. 396(k)(11)

The station posted some Federal Communication Commission EEO information and
supplementary information for FY 2018 on its website but did not have a process for making the
current CPB Employment Statistical Report available to the public.




                                                 7
       Local Content and Service Report

The station’s LCSR was not available to the public on the station’s website or readily
available at its central office when requested.

CPB’s 2020 Television Community Service Grants General Provisions require the following
transparency requirements (Section 6).

   C. Documents for Public Inspection: At Central Office or on Station Website: At a
   minimum, each Grantee must maintain the following documents for public inspection at
   its central office, or post the same on its station website: …

   2. LCSR (which is Section 6 of the SAS).

The station posted previous years’ LCSRs on its website. When we started our fieldwork in
September of 2020, we found the FY 2018 LCSR was posted on the website.

                                           *   *    *   *    *

Station management said due to turnover in its IT department and remote work situation during
COVID 19, the station experienced breakdowns in communications and delays uploading the FY
2019 and current financial information to its website. The station updated its website in January
2021 and now has its FY 2020 AFR and audited financial statements, as well as its current
Employment Statistical report and LCSR available on its website. AETC it is now compliant
with these requirements.

AETC was not in full compliance with Act and transparency requirements during our audit
period and may be subject to penalties under CPB’s CSG Non-Compliance policy.

       Recommendations:

We recommend that CPB management require AETC to:

    1) fully comply with Act and General Provisions requirements for open meeting advance
       notices, reasons for closing meetings, open financial records, and making the
       Employment Statistical Report and LCSR available to the public; and
    2) identify the corrective actions and controls it will implement to ensure future compliance
       with Act and General Provision requirements.

       AETC Management Response:

In response to the draft report, AETC management agreed that there were some instances of
insufficient notice of open meetings and that it did not provide the required public documents for
all closed meetings. In addition, station management agreed that it did not have the most recent
audited financial statement and AFR posted on the website but had corrected this during the



                                                8
audit. AETC management did not agree that it did not make its Employment Statistical Report
and LCSR available to the public at its central offices. The station has taken corrective actions,
updated its procedures, and said it is setting up a quarterly review team as well as additional
senior management reviews to ensure the station is compliant. Station management emphasized
that they take compliance seriously and have created additional steps to ensure prior deficiencies
are never repeated.

       OIG Review and Comment:

As we discussed in the body of the report, the station corrected or addressed these deficiencies
during our audit fieldwork. We do not agree that the Employment Statistical Report and LCSR
were made available to the public in a reasonable time. We made several verbal and written
requests to station management to provide OIG with copies of the current Employment
Statistical Report and LCSR during our fieldwork to verify these reports were readily available
to the public. We were directed to different personnel to obtain this information and to the
station’s website but were not provided with the current CPB required reports until late in our
fieldwork. We concluded these reports were not readily available to the public.

We accept that the station had prepared these reports, however AETC did not have an adequate
process in place during our fieldwork to make them available to the public or respond to our
requests. Currently, AETC has posted the required information on the website and has also
explained their new process for making these reports available at the central office.

Based on AETC management’s response to the draft audit report, we consider recommendations
one and two resolved but open pending CPB’s final management decisions resolving the audit
findings and acceptance of the station’s corrective action.

II. VETERANS COMING HOME - QUESTIONED PRODUCTION COSTS

Our review of the Veterans Coming Home grant (CPB Grant No. 34732) identified questioned
CPB costs of $11,650 and a lack of compliance with project recordkeeping and related financial
and budget documentation requirements. Specifically, our audit found:

   •   questioned costs of $6,087 because of a lack of payroll documentation and the final
       financial report did not reconcile to the grantee’s general ledger:

           o $5,985 in unsupported payroll; and
           o $102 in unsupported marketing costs reported but not recorded in the general
               ledger;
   •   the salary costs incurred on this project were not recorded in this grant’s accounting
       records established in the general ledger;
   •   production budget reallocations of $5,563 were not formally approved by CPB; and
   •   legitimate travel and rental costs of $1,500 were not recorded in the general ledger before
       the end of the grant because the purchase order and related invoicing were not completed
       during the grant period.



                                                9
      Unsupported Questioned Costs

Our audit of the grant’s final financial report (FFR) found that $5,985 in grant salary and
benefit costs were not supported in AETC’s general ledger or with contemporaneous project
time records as required by CPB’s Terms and Conditions. Our reconciliation of the FFR to
the general ledger also identified unsupported marketing costs of $102. AETC did not
provide an invoice or general ledger support for these salary and marketing costs.

Station management explained that it did not have any supporting documents for the payroll
costs that were reported on its final report. An AETC financial official explained that the station
did not set up any grant payroll cost allocation, so the actual salary costs were not tracked in the
Arkansas Administrative Statewide Information System, its general ledger accounting system, as
it did for similar costs under a state education grant. Management said that in the future it will
have the project team keep excel time sheets so it can better document the actual grant salary
costs. Subsequent to our fieldwork management provided us with reconstructed payroll costs to
demonstrate that they had incurred the salary expenses that were reported on the FFR, however
without the contemporaneous time and payroll records we could not attest to the accuracy of the
reported salary costs.

      Project Recordkeeping

The station submitted its FFR to CPB for the Veterans Coming Home grant and certified that
its FFR reconciled to its general ledger. However, the station could not provide support for
payroll costs because it said that its payroll costs were not recorded in the Veteran’s Coming
Home discrete project accounts in its general ledger, but rather through its payroll system.
Additionally, we found that the station’s accounting records did not include $1,500 in travel
and rental costs incurred during the grant period because the purchase order and related
invoicing were not completed until after the grant had expired. These costs had not been
accrued because the project records were maintained on a cash basis. Station financial
officials did not specifically address why some costs incurred during the grant period were
not formally authorized prior to the end of the grant spending period.

      Budget Reallocations

Our review of the FFR compared to the grant budget identified a $5,563 production budget
overrun, and a salary and benefits budget underrun of $1,330. The production budget overrun
was not approved by CPB, resulting in questioned costs of $5,563.

AETC grant project management reported to station management that it had discussed content
changes with CPB’s consultant managing the Veterans Coming Home project but did not
provide any additional documentation requesting budget reallocations. More specifically, AETC
reallocated above the line salaries and benefits ($1,330) and the production budget line item
($5,563 or 86 percent) more than the allowed 25 percent or $5,000 without CPB’s prior written
approvals. 3 AETC officials said CPB approved the deliverables and the FFR which identified


3
    The FFR reported a net over budget of $49 ($6,418 over budget and $6,369 under budget line items).



                                                          10
the variances and budget reallocations with explanations (provided in Exhibit D). As such,
project and station management assumed these reallocations were approved.

                                         *    *        *   *   *

CPB Grant No. 34732 EDU grant agreement incorporated CPB’s Terms and Conditions for
Television, Radio and other Media Production Grants – November 2015 Edition and requires
grantees to comply with Section 4 Budget and Financial Reporting requirements. These
requirements address budget changes, maintaining project records to account for all revenues
and expenses, contemporaneous labor records, and reporting requirements to reconcile final
reports to the general ledger, as follows.

       D. Changes to the Budget. Once a Budget has been approved and a Grant Agreement
       has been signed, the Grantee may make reallocations among Budget line items
       (except those covering “above the line” salaries, equipment, and general
       administrative/overhead expenses) without CPB’s approval so long as no such
       reallocation involves an increase or decrease in any single Budget line item in excess
       of the greater of 25% of such line item or $5,000 of such line item. CPB consent to an
       increase in Total Budget Cost will not signify an increase in the Grant. A Grantee
       may make no other changes to the overall Budget or individual line items without
       CPB’s prior written approval. Each Grantee must specifically identify and report all
       Budget reallocations in its interim and final financial accountings to CPB, as well as
       explain any allocations in excess of Grantee’s discretion to make changes without
       CPB approval....

       G. Records. A Grantee and its subcontractors, if any, must keep books, records, and
       accounts relating to the Grant and the Grant Project sufficient to:

              i) enable CPB to verify all direct costs, overhead, and administrative
              allocations associated with the Grant Project;

              ii) allow CPB, by examination of Grantee’s general ledger and other records,
              to account for the Grant Project level of activities in sufficient detail to enable
              an audit to verify the investment of the CPB funds in the approved expenses
              of the Grant Project;

              iii) disclose fully the amount and use of the proceeds of the Grant, the Total
              Project Cost, and the amount and nature of any portion of the Total Project
              Cost supplied by sources other than CPB.

              iv) substantiate labor costs with timesheets or other relatively
              contemporaneous record-keeping documents, consistent with the
              representation of those costs within the budget of the Grant or the subcontract
              of the Grant. Specifically:




                                                  11
                       a) costs represented in a budget as hourly costs must be recorded no
                       less frequently than every two weeks;
                       b) costs represented in a budget as a percentage of annual time must be
                       recorded no less frequently than every month;
                       c) in the case of a fixed price line item over $5,000 that was not
                       awarded pursuant to competitive bidding procedure, there must be
                       documentation of the reasonableness of a fixed fee; and

               v) permit an effective audit.…

       K. Grant Project Financial Reports. Each Grantee must provide CPB with interim
       financial reports during production of its Grant Project according to the schedule
       contained in the Grant Agreement. Each Grantee must also provide CPB with a final
       financial report when the Grant Project is completed and delivered. All financial
       reports shall: ….

               v) be reconcilable with the Grantee’s general ledger accounts….

To summarize, because AETC did not adequately support its payroll and miscellaneous costs,
reconcile its FFR to its general ledger to ensure accurate reporting, or seek approval of its budget
reallocations, it was not compliant with grant term requirements resulting in questioned costs of
$11,650.

       Recommendations:

We recommend that CPB management require AETC to:

    3) repay the questioned costs of $11,650;
    4) maintain adequate contemporaneous documentation of labor time charged to CPB
       grants; and
    5) identify corrective actions to comply with CPB requirements to: address budget changes,
       maintain project records to account for all revenues and expenses, maintain
       contemporaneous labor records, and submit final reports reconcilable to the general
       ledger to permit an effective audit.

       AETC Management’s Response:

In response to the draft report, AETC management said its accounting system cannot track salary
costs by grant project and it is not feasible to set up cost allocations. However, station
management said they have established a method to track grant project costs in a spreadsheet and
make manual entries into the grant project modules of its accounting system to ensure all costs
are included and can be reconciled to the grant’s FFR in the future. As stated in the body of the
report and in the response, the station provided a recap of the personnel time and rates spent on
the grant and feels that all CPB grant funding on this project was spent by the station and that all
deliverables were provided and approved by CPB.




                                                 12
Station management agreed that they did not get CPB’s express approval for budget reallocations
but that these reallocations had been discussed with CPB’s consultant and these discussions were
included in interim reports to the consultant. Therefore, station project management assumed
there was implied CPB approval. In addition, they explained that station practices require timely
reporting of expenses but that in this instance there were some invoices that were not presented
to accounting in a timely manner. They said that going forward, all incurred costs will be billed
and recorded during the applicable grant period.

       OIG Review and Comment:

Based on the response to our draft report, we have not changed our findings. While the station
provided a recap of salary related costs, they could not provide us with contemporaneous time
records for us to verify. In our discussions with station management, they stated project
management worked with a CPB consultant on content and that changes were communicated.
However, we did not receive any documentation showing budget reallocation approvals. We
noted that AETC sent interim narratives to CPB and CPB approved the interim reports; we did
not find written approval of AETC’s budget reallocations. This was a short-term project of eight
months and only a final financial report was required, therefore there were no interim financial
budget reports prepared. Station management stated they have implemented corrective actions to
address the findings, however the response did not address repayment of the questioned costs.

We consider recommendations three, four, and five unresolved pending CPB’s final
determination on our findings and recommendations.

III. AFR REPORTING ERRORS

Our audit of the AFRs found reporting errors on Schedule A, Schedule C, and Schedule E. The
errors did not affect the total NFFS claimed and reported. Our specific observations follow.

       AFR Schedule A

AETC and AETNF incorrectly recorded sources for NFFS for some transactions tested in our
audit work. Our audit identified:

   •   contributions from foundations and not-for-profits were reported as contributions on
       AFR Schedule A line 9 business enterprises and line 3 local government when they
       should have been recorded on Line 8 for foundations and not-for-profits; and
   •   NFFS reported as underwriting on line 8.1A were from grants and should have been
       reported on line 8.1B.

We concluded that although there was misreporting of the sources of revenue, there was no
impact on NFFS as all were eligible contribution sources. For the NFFS reporting on AFR
Schedule A, the station and foundation did not fully review all sources when classifying
contributions sources on its AFR.

CPB Guidelines 2019 and 2020 – Part III provide instructions for completing the AFR.



                                               13
   Completing AFR Schedule A - Direct Revenue

   Schedule A requires that you report your revenues in two broad categories - Source and
   Form. Revenues by source are reported on Lines 1 through 12. For Lines 3 through 9,
   grantees are required to breakdown the source categories by transaction type, paying
   particular attention to NFFS eligibility. Additional revenues by form (or type) are
   reported on Lines 13 through 21.

       AFR Schedule C

AETC is the licensee of AETN/Arkansas PBS the CSG grantee. The licensee is a state
commission of the state of Arkansas and identified as a state licensee for CSG reporting.
AETC reported $460,431 ($254,301 in FY 2019 and $206,130 in FY 2020) in NFFS for
professional and general operational services received from other state agencies as in-kind
services on its AFR Schedule C. CPB does not allow in-kind services from a station’s
licensee to be claimed as NFFS. However, CPB guidelines allow institutional stations to
claim certain indirect costs from its licensee as NFFS and report those on Schedule B. CPB
recognizes that state agencies operate differently than institutional university stations and
allows a CPB approved “Grantee-Developed method” to be used to claim these services as
IAS. While AETC did not seek to claim these services as IAS, in our judgment they would
have qualified as indirect type support on Schedule B.

We also found that AETNF did not receive all the required documentation for one in-kind
trade totaling $7,500 claimed in FY 2020, however during our audit fieldwork this was
corrected. AETNF said it has established a procedure to ensure it receives all required
documentation from donors in the future.

CPB’s Guidelines FY 2019 and FY 2020 Part II NFFS provide guidelines for excluding certain
in-kind contributions as NFFS and establish additional documentation requirements for
allowable in-kind contributions:

   X. Other In-kind Contributions Excluded from NFFS.

   Below are other in-kind contributions that may not be reported as NFFS.

       J. Licensee in-kind contributions. In-kind contributions made by the licensee to the
       station.

CPB allows certain contributions as in-kind NFFS and requires additional documentation:

   VII. NFFS: In-kind Contributions

       C. Documentation. The CSG recipient must have documentation from the donor that:

               1. was prepared at the time the contribution is made;



                                                14
               2. is printed on the donor’s business stationery or an invoice that prominently
               displays the donor’s name, address, business logo, and contact information;
               3. describes the contribution;
               4. shows the date the contribution was provided to the CSG recipient;
               5. identifies the fair market value of the contribution using a clearly
               measurable and objective valuation method (e.g., lawyer’s hourly rate
               multiplied by the number of hours worked) pursuant to GAAP;
               6. states the donor’s intent to donate or trade the goods and/or services; and
               7. includes the signature, name, and title of the donor or its representative.

CPB has specific guidelines for reporting IAS from an institutional station’s licensee. In FY
2020, CPB updated it guidelines and methodologies for calculating and reporting IAS and
continues to allow the “Grantee-Developed method” for state entities in certain circumstances.

   III. NFFS from Institutional Licensees

   An institutional licensee is a state or local government, public or private college, or
   university or the government of a United States territory that holds a license for a radio
   and/or television station. Its activities do not have to be devoted exclusively to public
   broadcasting. CSG recipients may report the following revenues as NFFS if they were
   provided by their institutional licensees and not excluded as set forth in Part II, Section
   VI.

       A. direct revenues, i.e., cash, including appropriations (collectively Direct Revenues);

       B. expenses incurred or absorbed by the station’s institutional licensee that directly
       benefit the station; and

       C. IAS (see Part II, Section XII).

   XII. Indirect Administrative Support (IAS) (Guidelines 2020)

   IAS is the value of services an institutional licensee provides to its station for facilities
   and administrative costs (F&A) and occupancy value (OV), as defined below.

       • F&A: are general administration costs (also known as institutional support) and
       operations and maintenance costs (also known as physical plant support).
       • OV: is the value of a station’s pro-rata share of the annual depreciation of a
       licensee-owned building or land associated with tower facilities that is fully or
       partially occupied by the station.
       • Institutional licensee: is the entity with a valid renewable licensee from the United
       States Government to operate a full-power, noncommercial, educational radio or
       television station and the entity’s operations are not devoted primarily to said
       station’s operations, such as public and private colleges and universities, state, and
       local governments.




                                                  15
       To report IAS, radio and television CSG recipients that file an AFR must use the standard
       method worksheet on Schedule B. However, with prior approval from CPB, a station
       operated by a state or local government may use a grantee-developed method worksheet
       to calculate IAS if its licensee’s audited financial statement lacks sufficient details to
       identify F&A….

Guidelines FY 2020 Part II NFFS Sections III and XII.

The station reported legal and audit services received from other state agencies on its AFR
Schedule C line 1 as professional in-kind services and received documentation supporting the
fair market value of the services provided. In addition, the station rented tower space from
the state police agency and state fish and game commission and reported it as NFFS on AFR
Schedule C line 2.A. Further, the station received administrative services from the state
central services 4 and claimed as in-kind contributions on AFR Schedule C line 2.C. AETC
obtained appropriate valuation documentation to support the amounts claimed. Because
these state agencies were not its commission, the licensee, AETC evaluated and claimed
these services as in-kind, not as IAS.

For the one in-kind trade lacking donor documentation, the station had an in-kind
sponsorship agreement for spot underwriting in exchange for AETC advertisements placed in
a local publication. The station received copies as documentation of fulfillment, but an ad
copy by itself does not meet CPB’s documentation requirements for in-kind contributions.
During our fieldwork, the station subsequently received the correct donor documentation,
and we accepted the in-kind trade as eligible NFFS.

           AFR Schedule E

AETC incorrectly recorded CPB expenses on its FY 2019 AFR Schedule E -Expenditures in
line items D. as all non-CPB funds. AETC should have reported the $25,000 in Veterans
Coming Home grant funds as CPB funds on its AFR Schedule E line 1.C or Line 3.C. The
station omitted the Veterans Coming Home CPB funds as CPB funded expenses when it
prepared the AFR Schedule E in error.

CPB Guidelines Part III provide instructions for completing the AFR Schedule E for station
expenditures:

Completing AFR Schedule E – Expenses

       Reporting CPB Grant Expenditures

       For each functional expense category on Lines 1 through 7, grantees must indicate the
       CPB and non-CPB funds used under the following categories....

       For TV Grantees:


4
    AETC claimed central services based on the state’s federally approved cost allocation agreement.



                                                          16
   A. TV CSG
   B. TV Interconnection
   C. Other CPB Funds
   D. All non-CPB Fund

To summarize, AETC’s AFR reporting to CPB was not completely accurate and AETC did
not have adequate internal controls to ensure the correct reporting of CPB grant expenditures.

       Recommendations:

We recommend that CPB management require AETC to:

   6) establish a “Grantee-Developed method” for calculating IAS with CPB’s approval and
      report its future IAS on AFR Schedule B; and
   7) identify the corrective actions it will implement to ensure future compliance with CPB
      AFR reporting requirements.

       AETC Management’s Response:

In response to the draft report, AETC management stated they agreed with the AFR Schedule A
classification changes and will make appropriate corrections going forward. The response also
stated that based on prior CPB desk reviews, station management believed they had reported
these transactions on the proper AFR line.

Further, station management said they would work with CPB to establish a “Grantee-Developed
Method” for reporting its licensee indirect services on AFR Schedule B, despite consistently
reporting these services as in-kind revenues on its audited financial statement and AFR and CPB
desk reviewed these reports without comment in prior years.

Finally, the response restated that other in-kind support documentation was received, the issue
with a particular donor has been corrected, and the foundation has put additional procedures in
place to ensure all documentation from donors is received in the future. AETC management
agreed that it had omitted reporting the CPB funded Veteran’s Coming Home grant expenses as
other CPB expenses on AFR Schedule E in error.

       OIG Review and Comment:

Based on the response to the draft report, we consider recommendations six and seven
unresolved pending CPB’s final management decisions resolving the audit findings.




                                               17
                                                                                     Exhibit A

                                      CPB Payments to AETC
                                 July 1, 2018 through June 30, 2020

                         CPB Grants                        2019         2020          Total
Community Service Grants:                                  $1,913,046   $1,834,076   $3,747,122
Interconnection Grant                                         36,430       35,648        72,078
Distance Service Grant                                        97,900       97,900       195,800
Universal Service Grant                                       78,828       79,495       158,323
           Total Community Service Grants                  $2,126,204   $2,047,119   $4,173,323


Other Grants:
CARES                                                             $0     $260,205      $260,205
Veterans Coming Home -Grant No. 34732-EDU                     25,000            0        25,000
                  Total Other Grants                         $ 25,000    $ 260,205     $285,205


             Total CPB Payments to AETC                    $2,151,204   $2,307,324   $4,458,528




                                                 18
                                                                                                          Exhibit B



                                 AETC-TV Annual Financial Report
                        For the periods ending June 30, 2019 and June 30, 2020
Schedule A
Arkansas Educational Television Network (1708)
Conway, AR

NFFS Excluded?
If you have an NFFS Exclusion, please click the "NFFS X" button, and enter your NFFS
data.

   Source of Income                                                            2019 data      2020 data
   1. Amounts provided directly by federal government agencies                         $0           $0

        A. Grants for facilities and other capital purposes                            $0           $0

        B. Department of Education                                                     $0           $0

        C. Department of Health and Human Services                                     $0           $0

        D. National Endowment for the Arts and Humanities                              $0           $0

        E. National Science Foundation                                                 $0           $0

        F. Other Federal Funds (specify)                                               $0           $0

   2. Amounts provided by Public Broadcasting Entities                       $2,234,745     $2,342,539

        A. CPB - Community Service Grants                                    $2,126,204     $2,307,324

        B. CPB - all other funds from CPB (e.g. DDF, RTL,                       $18,332       $18,000
        Programming Grants)
        C. PBS - all payments except copyright royalties and                    $80,209       $12,165
        other pass-through payments. See Guidelines for details.
        D. NPR - all payments except pass-through payments.                            $0           $0
        See Guidelines for details.
        E. Public broadcasting stations - all payments                          $10,000        $2,500

        F. Other PBE funds (specify)                                                   $0      $2,550
                 Description                             Amount
                 Meeting & Travel Reimb                   $2,550


   3. Local boards and departments of education or other local                  $21,000        $7,500
   government or agency sources
        3.1 NFFS Eligible                                                       $21,000        $7,500

        A. Program and production underwriting                                  $21,000        $7,500

        B. Grants and contributions other than underwriting                            $0           $0

        C. Appropriations from the licensee                                            $0           $0

        D. Gifts and grants for facilities and equipment as                            $0           $0
        restricted by the donor or received through a capital
        campaign (Radio only)
        E. Gifts and grants received through a capital campaign                        $0           $0
        but not for facilities and equipment
        F. Other income eligible as NFFS (specify)                                     $0           $0

        3.2 NFFS Ineligible                                                            $0           $0

        A. Rental income


                                                                  19
                                                                                Exhibit B (continued)


                              AETC-TV Annual Financial Report
                     For the periods ending June 30, 2019 and June 30, 2020
                                                                          $0             $0

    B. Fees for services                                                  $0             $0

    C. Licensing fees (not royalties – see instructions for Line          $0             $0
    15)
    D. Gifts and grants for facilities and equipment as                   $0             $0
    restricted by the donor or received through a capital
    campaign (TV only)
    E. Other income ineligible for NFFS inclusion                         $0             $0

4. State boards and departments of education or other state        $8,118,232     $8,218,298
government or agency sources
    4.1 NFFS Eligible                                              $8,111,391     $8,212,413

    A. Program and production underwriting                            $2,400             $0

    B. Grants and contributions other than underwriting            $2,830,550     $2,747,337

    C. Appropriations from the licensee                            $5,278,441     $5,465,076

    D. Gifts and grants for facilities and equipment as                   $0             $0
    restricted by the donor or received through a capital
    campaign (Radio only)
    E. Gifts and grants received through a capital campaign               $0             $0
    but not for facilities and equipment
    F. Other income eligible as NFFS (specify)                            $0             $0

    4.2 NFFS Ineligible                                               $6,841         $5,885

    A. Rental income                                                  $3,400         $3,400

    B. Fees for services                                                  $0             $0

    C. Licensing fees (not royalties – see instructions for Line          $0             $0
    15)
    D. Gifts and grants for facilities and equipment as                   $0             $0
    restricted by the donor or received through a capital
    campaign (TV only)
    E. Other income ineligible for NFFS inclusion                     $3,441         $2,485
                Description                         Amount
                Misc                                 $2,485


5. State colleges and universities                                        $0            $35

    5.1 NFFS Eligible                                                     $0             $0

    A. Program and production underwriting                                $0             $0

    B. Grants and contributions other than underwriting                   $0             $0

    C. Appropriations from the licensee                                   $0             $0

    D. Gifts and grants for facilities and equipment as                   $0             $0
    restricted by the donor or received through a capital
    campaign (Radio only)

    E. Gifts and grants received through a capital campaign               $0             $0
    but not for facilities and equipment
    F. Other income eligible as NFFS (specify)                            $0             $0


                                                              20
                                                                         Exhibit B (continued)


                              AETC-TV Annual Financial Report
                     For the periods ending June 30, 2019 and June 30, 2020

    5.2 NFFS Ineligible                                            $0            $35

    A. Rental income                                               $0            $0

    B. Fees for services                                           $0            $0

    C. Licensing fees (not royalties – see instructions for Line   $0            $0
    15)
    D. Gifts and grants for facilities and equipment as            $0            $0
    restricted by the donor or received through a capital
    campaign (TV only)
    E. Other income ineligible for NFFS inclusion                  $0            $35
                Description                          Amount
                Ancillary Sales                          $35


6. Other state-supported colleges and universities                 $0         $1,200

    6.1 NFFS Eligible                                              $0         $1,200

    A. Program and production underwriting                         $0         $1,200

    B. Grants and contributions other than underwriting            $0            $0

    C. Appropriations from the licensee                            $0            $0

    D. Gifts and grants for facilities and equipment as            $0            $0
    restricted by the donor or received through a capital
    campaign (Radio only)
    E. Gifts and grants received through a capital campaign        $0            $0
    but not for facilities and equipment
    F. Other income eligible as NFFS (specify)                     $0            $0

    6.2 NFFS Ineligible                                            $0            $0

    A. Rental income                                               $0            $0

    B. Fees for services                                           $0            $0

    C. Licensing fees (not royalties – see instructions for Line   $0            $0
    15)
    D. Gifts and grants for facilities and equipment as            $0            $0
    restricted by the donor or received through a capital
    campaign (TV only)
    E. Other income ineligible for NFFS inclusion                  $0            $0

7. Private colleges and universities                               $0            $0

    7.1 NFFS Eligible                                              $0            $0

    A. Program and production underwriting                         $0            $0

    B. Grants and contributions other than underwriting            $0            $0

    C. Appropriations from the licensee                            $0            $0

    D. Gifts and grants for facilities and equipment as            $0            $0
    restricted by the donor or received through a capital
    campaign (Radio only)
    E. Gifts and grants received through a capital campaign


                                                              21
                                                                              Exhibit B (continued)


                             AETC-TV Annual Financial Report
                    For the periods ending June 30, 2019 and June 30, 2020
    but not for facilities and equipment                                $0             $0

    F. Other income eligible as NFFS (specify)                          $0             $0

    7.2 NFFS Ineligible                                                 $0             $0

    A. Rental income                                                    $0             $0

    B. Fees for services                                                $0             $0

    C. Licensing fees (not royalties – see instructions for Line        $0             $0
    15)
    D. Gifts and grants for facilities and equipment as                 $0             $0
    restricted by the donor or received through a capital
    campaign (TV only)
    E. Other income ineligible for NFFS inclusion                       $0             $0

8. Foundations and nonprofit associations                          $85,013        $38,888

    8.1 NFFS Eligible                                              $53,375        $29,745

    A. Program and production underwriting                         $51,775        $24,650

    B. Grants and contributions other than underwriting             $1,600         $5,095

    C. Gifts and grants for facilities and equipment as                 $0             $0
    restricted by the donor or received through a capital
    campaign (Radio only)
    D. Gifts and grants received through a capital campaign             $0             $0
    but not for facilities and equipment
    E. Other income eligible as NFFS (specify)                          $0             $0

    8.2 NFFS Ineligible                                            $31,638         $9,143

    A. Rental income                                                  $630             $0

    B. Fees for services                                                $0         $8,836

    C. Licensing fees (not royalties – see instructions for Line        $0           $307
    15)
    D. Gifts and grants for facilities and equipment as            $31,008             $0
    restricted by the donor or received through a capital
    campaign (TV only)
    E. Other income ineligible for NFFS inclusion                       $0             $0

9. Business and Industry                                           $348,538       $270,302

    9.1 NFFS Eligible                                              $332,685       $264,938

    A. Program and production underwriting                         $322,283       $253,383

    B. Grants and contributions other than underwriting            $10,402        $11,555

    C. Gifts and grants for facilities and equipment as                 $0             $0
    restricted by the donor or received through a capital
    campaign (Radio only)
    D. Gifts and grants received through a capital campaign             $0             $0
    but not for facilities and equipment
    E. Other income eligible as NFFS (specify)                          $0             $0


                                                              22
                                                                                    Exhibit B (continued)



                              AETC-TV Annual Financial Report
                     For the periods ending June 30, 2019 and June 30, 2020
     9.2 NFFS Ineligible                                                $15,853          $5,364

     A. Rental income                                                         $0              $0

     B. Fees for services                                                     $0              $0

     C. Licensing fees (not royalties – see instructions for Line             $0              $0
     15)
     D. Gifts and grants for facilities and equipment as                      $0              $0
     restricted by the donor or received through a capital
     campaign (TV only)
     E. Other income ineligible for NFFS inclusion                      $15,853          $5,364
               Description                            Amount
               Purch Card Rebates                      $2,115
               Misc Reimbursements                     $3,249


10. Memberships and subscriptions (net of membership bad              $2,005,254      $2,416,780
debt expense)
     10.1 NFFS Exclusion – Fair market value of premiums               $309,186         $265,594
     that are not of insubstantial value
     10.2 NFFS Exclusion – All bad debt expenses from                         $0              $0
     NFFS eligible revenues including but not limited to
     pledges, underwriting, and membership (unless netted
     elsewhere in Schedule A)
                               2019 data      2020 data
     10.3 Total number of        20,159          22,541
     contributors.

11. Revenue from Friends groups less any revenue included                     $0              $0
on line 10
                            2019 data       2020 data
11.1 Total number of                  0              0
Friends contributors.

12. Subsidiaries and other activities unrelated to public                     $0              $0
broadcasting (See instructions)
     A. Nonprofit subsidiaries involved in telecommunications                 $0              $0
     activities
     B. NFFS Ineligible – Nonprofit subsidiaries not involved in              $0              $0
     telecommunications activities
     C. NFFS Ineligible – For-profit subsidiaries regardless of               $0              $0
     the nature of its activities
     D. NFFS Ineligible – Other activities unrelated to public                $0              $0
     brodcasting

Form of Revenue                                                         2019 data       2020 data
13. Auction revenue (see instructions for Line 13)                            $0              $0

     A. Gross auction revenue                                                 $0              $0

     B. Direct auction expenses                                               $0              $0

14. Special fundraising activities (see instructions for Line 14)        $3,074          $2,713

     A. Gross special fundraising revenues                               $3,074          $2,713

     B. Direct special fundraising expenses                                   $0              $0

15. Passive income                                                      $93,843         $55,724


                                                                 23
                                                                              Exhibit B (continued)



                               AETC-TV Annual Financial Report
                      For the periods ending June 30, 2019 and June 30, 2020
    A. Interest and dividends (other than on endowment              $93,696         $49,122
    funds)
    B. Royalties                                                      $147              $0

    C. PBS or NPR pass-through copyright royalties                      $0           $6,602

16. Gains and losses on investments, charitable trusts and gift     $85,428         $-8,267
annuities and sale of other assets (other than endowment
funds)
    A. Gains from sales of property and equipment (do not               $0              $0
    report losses)
    B. Realized gains/losses on investments (other than             $37,171         $35,554
    endowment funds)
    C. Unrealized gains/losses on investments and actuarial         $48,257        $-43,821
    gains/losses on charitable trusts and gift annuities (other
    than endowment funds)
17. Endowment revenue                                              $876,993        $233,639

    A. Contributions to endowment principal                        $638,775         $38,382

    B. Interest and dividends on endowment funds                    $86,114         $97,261

    C. Realized net investment gains and losses on                 $220,135        $167,008
    endowment funds (if this is a negative amount, add a
    hyphen, e.g., "-1,765")
    D. Unrealized net investment gains and losses on               $-68,031        $-69,012
    endowment funds (if this is a negative amount, add a
    hyphen, e.g., "-1,765")
18. Capital fund contributions from individuals (see                    $0              $0
instructions)
    A. Facilities and equipment (except funds received from             $0              $0
    federal or public broadcasting sources)
    B. Other                                                            $0              $0

19. Gifts and bequests from major individual donors                $315,173        $208,338
                             2019 data        2020 data
19.1 Total number of                120             137
major individual donors

20. Other Direct Revenue                                             $1,654          $6,863
    Description                                  Amount
    Proj UW                                       $5,000
        Exclusion Description       Amount
        Production, taping, or       $5,000
        other broadcast related
        activities

    Ancillary Sales                                $1,863
        Exclusion Description       Amount
        Sale of premiums             $1,863



Line 21. Proceeds from the FCC Spectrum Incentive Auction,              $0              $0
interest and dividends earned on these funds, channel
sharing revenues, and spectrum leases
    A. Proceeds from sale in spectrum auction                           $0              $0

    B. Interest and dividends earned on spectrum auction                $0              $0


                                                              24
                                                                                  Exhibit B (continued)



                            AETC-TV Annual Financial Report
                   For the periods ending June 30, 2019 and June 30, 2020
    related revenue
    C. Payments from spectrum auction speculators                           $0                $0

    D. Channel sharing and spectrum leases revenues                         $0                $0

    E. Spectrum repacking funds                                             $0                $0

22. Total Revenue (Sum of lines 1 through 12, 13.A, 14.A, and      $14,188,947       $13,794,552
15 through 21)
Click here to view all NFFS Eligible revenue on Lines 3
through 9.

Click here to view all NFFS Ineligible revenue on Lines 3
through 9.

Adjustments to Revenue                                                2019 data         2020 data
23. Federal revenue from line 1.                                            $0                $0

24. Public broadcasting revenue from line 2.                       $2,234,745         $2,342,539

25. Capital funds exclusion—TV (3.2D, 4.2D, 5.2D, 6.2D,               $31,008                 $0
7.2D, 8.2D, 9.2D, 18A)
26. Revenue on line 20 not meeting the source, form,                   $1,654            $6,863
purpose, or recipient criteria
27. Other automatic subtractions from total revenue                  $570,042          $375,750

    A. Auction expenses – limited to the lesser of lines 13a or             $0                $0
    13b
    B. Special fundraising event expenses – limited to the                  $0                $0
    lesser of lines 14a or 14b
    C. Gains from sales of property and equipment – line 16a                $0                $0

    D. Realized gains/losses on investments (other than               $37,171           $35,554
    endowment funds) – line 16b
    E. Unrealized investment and actuarial gains/losses               $48,257          $-43,821
    (other than endowment funds) – line 16c
    F. Realized and unrealized net investment gains/losses           $152,104           $97,996
    on endowment funds – line 17c, line 17d
    G. Rental income (3.2A, 4.2A, 5.2A, 6.2A, 7.2A, 8.2A,              $4,030            $3,400
    9.2A)
    H. Fees for services (3.2B, 4.2B, 5.2B, 6.2B, 7.2B, 8.2B,               $0           $8,836
    9.2B)
    I. Licensing Fees (3.2C, 4.2C, 5.2C, 6.2C, 7.2C, 8.2C,                  $0              $307
    9.2C)
    J. Other revenue ineligible as NFFS (3.2E, 4.2E, 5.2E,            $19,294            $7,884
    6.2E, 7.2E, 8.2E, 9.2E)
    K. FMV of high-end premiums (Line 10.1)                          $309,186          $265,594

    L. All bad debt expenses from NFFS eligible revenues                    $0                $0
    including but not limited to pledges, underwriting, and
    membership (Line 10.2)
    M. Revenue from subsidiaries and other activities                       $0                $0
    ineligible as NFFS (12.B, 12.C, 12.D)
    N. Proceeds from spectrum auction and related revenues                  $0                $0
    from line 21.
28. Total Direct Nonfederal Financial Support (Line 22 less        $11,351,498       $11,069,400
Lines 23 through 27). (Forwards to line 1 of the Summary of


                                                              25
                                                                                                        Exhibit B (continued)



                                 AETC-TV Annual Financial Report
                        For the periods ending June 30, 2019 and June 30, 2020
   Nonfederal Financial Support)

Comments
Comment                     Name                         Date                        Status
 Schedule B WorkSheet
 Arkansas Educational Television Network (1708)
 Conway, AR

Comments
Comment                     Name                         Date                        Status
 Occupancy List
 Arkansas Educational Television Network (1708)
 Conway, AR

                                                         Type of Occupancy Location                            Value
 Schedule B Totals
 Arkansas Educational Television Network (1708)
 Conway, AR

                                                                              2019 data                  2020 data

          1. Total support activity benefiting station                                         $                 $0

          2. Occupancy value                                                                                     $0

          3. Deductions: Fees paid to the licensee for overhead                                $                 $0
          recovery, assessment, etc.
          4. Deductions: Support shown on lines 1 and 2 in excess                              $                 $0
          of revenue reported in financial statements.
          5. Total Indirect Administrative Support (Forwards to Line 2                         $                 $0
          of the Summary of Nonfederal Financial Support)
          6. Please enter an institutional type code for your licensee.

Comments
Comment                      Name                        Date                         Status
 Schedule C
 Arkansas Educational Television Network (1708)
 Conway, AR

                                                                                     Donor
                                                                     2019 data       Code                    2020 data

 1. PROFESSIONAL SERVICES (must be eligible as NFFS)                      $98,320                             $103,800

     A. Legal                                                       SG    $30,000                  SG          $15,000

     B. Accounting and/or auditing                                  SG    $68,320                  SG          $88,800

     C. Engineering                                                            $0                                      $0

     D. Other professionals (see specific line item instructions               $0                                      $0
     in Guidelines before completing)


 2. GENERAL OPERATIONAL SERVICES (must be eligible as                     $306,817                            $258,010
 NFFS)
     A. Annual rental value of space (studios, offices, or tower    BS    $70,510                  BS          $70,510
     facilities)
     B. Annual value of land used for locating a station-owned      SU $140,000                    SU         $140,000
     transmission tower
     C. Station operating expenses                                  SG    $95,705                  SG          $47,500




                                                                   26
                                                                                                           Exhibit B (continued)



                                 AETC-TV Annual Financial Report
                        For the periods ending June 30, 2019 and June 30, 2020
                                                                                        Donor
                                                                       2019 data        Code                    2020 data

     D. Other (see specific line item instructions in Guidelines      FD      $602                                      $0
     before completing)


 3. OTHER SERVICES (must be eligible as NFFS)                              $71,375                                $76,951

     A. ITV or educational radio                                                   $0                                   $0

     B. State public broadcasting agencies (APBC, FL-DOE,                          $0                                   $0
     eTech Ohio)
     C. Local advertising                                             BS   $71,375                    BS          $76,951

     D. National advertising                                                       $0                                   $0

 4. Total in-kind contributions - services and other assets                $476,512                              $438,761
 eligible as NFFS (sum of lines 1 through 3), forwards to Line
 3a. of the Summary of Nonfederal Financial Support
 5. IN-KIND CONTRIBUTIONS INELIGIBLE AS NFFS                                       $0                             $26,475

     A. Compact discs, records, tapes and cassettes                                $0                                   $0

     B. Exchange transactions                                                      $0                                   $0

     C. Federal or public broadcasting sources                                     $0                                   $0

     D. Fundraising related activities                                BS           $0                                   $0

     E. ITV or educational radio outside the allowable scope of                    $0                                   $0
     approved activities
     F. Local productions                                                          $0                                   $0

     G. Program supplements                                                        $0                                   $0

     H. Programs that are nationally distributed                                   $0                                   $0

     I. Promotional items                                                          $0                                   $0

     J. Regional organization allocations of program services                      $0                                   $0

     K. State PB agency allocations other than those allowed                       $0                                   $0
     on line 3(b)
     L. Services that would not need to be purchased if not                        $0                                   $0
     donated
     M. Other                                                                      $0                 FD          $26,475

            Description                                Amount
           Trf of Equipment from Foundation In-         $26,475
           kind on AFS


 6. Total in-kind contributions - services and other assets (line 4        $476,512                              $465,236
 plus line 5), forwards to Schedule F, line 1c. Must agree with
 in-kind contributions recognized as revenue in the AFS.

Comments
Comment                     Name                         Date                            Status
 Schedule D
 Arkansas Educational Television Network (1708)
 Conway, AR

                                                                                                  Donor
                                                                       2019 data                   Code        2020 data
 1. Land (must be eligible as NFFS)                                                $                                   $0

 2. Building (must be eligible as NFFS)                                            $                                   $0



                                                                      27
                                                                                                        Exhibit B (continued)



                                AETC-TV Annual Financial Report
                       For the periods ending June 30, 2019 and June 30, 2020
                                                                                              Donor
                                                                     2019 data                 Code         2020 data

 3. Equipment (must be eligible as NFFS)                                         $                                  $0

 4. Vehicle(s) (must be eligible as NFFS)                                        $                                  $0

 5. Other (specify) (must be eligible as NFFS)                                   $                                  $0


 6. Total in-kind contributions - property and equipment eligible                $                                  $0
 as NFFS (sum of lines 1 through 5), forwards to Line 3b. of the
 Summary of Nonfederal Financial Support
 7. IN-KIND CONTRIBUTIONS INELIGIBLE AS NFFS                                     $                                  $0

     a) Exchange transactions                                                    $                                  $0

     b) Federal or public broadcasting sources                                   $                                  $0

     c) TV only—property and equipment that includes new                         $                                  $0
     facilities (land and structures), expansion of existing
     facilities and acquisition of new equipment
     d) Other (specify)                                                          $                                  $0


 8. Total in-kind contributions - property and equipment (line 6                 $                                  $0
 plus line 7), forwards to Schedule F, line 1d. Must agree with
 in-kind contributions recognized as revenue in the AFS.

Comments
Comment                      Name                       Date                         Status
 Schedule E
 Arkansas Educational Television Network (1708)
 Conway, AR

  EXPENSES
  (Operating and non-operating)

                   PROGRAM SERVICES                                                       2019 data           2020 data
                   1. Programming and production                                        $6,335,866          $6,124,784

                          A. TV CSG                                                       $452,623            $342,288

                          B. TV Interconnection                                               $36,430          $35,648

                          C. Other CPB Funds                                              $176,728            $437,600

                          D. All non-CPB Funds                                          $5,670,085          $5,309,248

                   2. Broadcasting and engineering                                      $4,380,725          $4,631,582

                          A. TV CSG                                                     $1,007,599           $986,815

                          B. TV Interconnection                                                   $0                $0

                          C. Other CPB Funds                                                      $0                $0

                          D. All non-CPB Funds                                          $3,373,126          $3,644,767

                   3. Program information and promotion                                   $873,365          $1,287,406

                          A. TV CSG                                                       $100,830            $146,766

                          B. TV Interconnection                                                   $0                $0




                                                                    28
                                                                                             Exhibit B (continued)



                              AETC-TV Annual Financial Report
                     For the periods ending June 30, 2019 and June 30, 2020

                PROGRAM SERVICES                                                 2019 data         2020 data
                     C. Other CPB Funds                                                $0                $0

                     D. All non-CPB Funds                                        $772,535        $1,140,640

                SUPPORT SERVICES                                                 2019 data         2020 data
                4. Management and general                                     $1,571,408         $1,821,963

                     A. TV CSG                                                   $126,635          $267,561

                     B. TV Interconnection                                             $0                $0

                     C. Other CPB Funds                                                $0                $0

                     D. All non-CPB Funds                                     $1,444,773         $1,554,402

                5. Fund raising and membership development                    $1,089,662         $1,150,436

                     A. TV CSG                                                         $0                $0

                     B. TV Interconnection                                             $0                $0

                     C. Other CPB Funds                                                $0                $0

                     D. All non-CPB Funds                                     $1,089,662         $1,150,436

                6. Underwriting and grant solicitation                                 $0                $0

                     A. TV CSG                                                         $0                $0

                     B. TV Interconnection                                             $0                $0

                     C. Other CPB Funds                                                $0                $0

                     D. All non-CPB Funds                                              $0                $0

                7. Depreciation and amortization (if not allocated to                  $0                $0
                functional categories in lines 1 through 6)
                     A. TV CSG                                                         $0                $0

                     B. TV Interconnection                                             $0                $0

                     C. Other CPB Funds                                                $0                $0

                     D. All non-CPB Funds                                              $0                $0

                8. Total Expenses (sum of lines 1 to 7) must agree with       $14,251,026       $15,016,171
                audited financial statements
                     A. Total TV CSG (sum of Lines 1.A, 2.A, 3.A, 4.A, 5.A,   $1,687,687         $1,743,430
                     6.A, 7.A)
                     B. Total TV Interconnection (sum of Lines 1.B, 2.B,          $36,430           $35,648
                     3.B, 4.B, 5.B, 6.B, 7.B)
                     C. Total Other CPB Funds (sum of Lines 1.C, 2.C, 3.C,       $176,728          $437,600
                     4.C, 5.C, 6.C, 7.C)
                     D. Total All non-CPB Funds (sum of Lines 1.D, 2.D,       $12,350,181       $12,799,493
                     3.D, 4.D, 5.D, 6.D, 7.D)

INVESTMENT IN CAPITAL ASSETS
Cost of capital assets purchased or donated
                                                                                2019 data         2020 data



                                                               29
                                                                                                                 Exhibit B (continued)



                                       AETC-TV Annual Financial Report
                              For the periods ending June 30, 2019 and June 30, 2020
                                                                                         2019 data             2020 data
                    9. Total capital assets purchased or donated                        $412,214              $222,475

                    9a. Land and buildings                                                      $0                    $0

                    9b. Equipment                                                       $388,212              $214,738

                    9c. All other                                                         $24,002                $7,737

                    10. Total expenses and investment in capital assets             $14,663,240            $15,238,646
                    (Sum of lines 8 and 9)

  Additional Information
  (Lines 11 + 12 must equal line 8 and Lines 13 + 14 must equal line 9)
                                                                                         2019 data             2020 data
                   11. Total expenses (direct only)                                  $13,774,514           $14,550,935

                   12. Total expenses (indirect and in-kind)                             $476,512              $465,236

                   13. Investment in capital assets (direct only)                        $412,214              $222,475

                   14. Investment in capital assets (indirect and in-                            $0                    $0
                   kind)

Comments
Comment                      Name                       Date                       Status
 Schedule F
 Arkansas Educational Television Network (1708)
 Conway, AR


                                                                                                                       2020 data
   1. Data from AFR

   a. Schedule A, Line 22                                                                                          $13,794,552

   b. Schedule B, Line 5                                                                                                        $0

   c. Schedule C, Line 6                                                                                               $465,236

   d. Schedule D, Line 8                                                                                                        $0

   e. Total from AFR                                                                                               $14,259,788

  Choose Reporting Model
  You must choose one of the three reporting models in order to complete Schedule F. After making your selection, click the "Choose" button
  below, which will display your reporting model. When changing to a different reporting model all data entered in the current reporting model
  will be lost.
       FASB      GASB Model A proprietary enterprise-fund financial        GASB Model B public broadcasting entity-wide statements with
                 statements with business-type activities only             mixed governmental and business-type activities
                                                                                                                            2020 data
   2. GASB Model B public broadcasting entity-wide
   statements with mixed governmental and business-
   type activities

   a. Charges for services                                                                                                  $36,153

   b. Operating grants and contributions                                                                               $5,307,363

   c. Capital grants and contributions                                                                                            $0

   d. Other revenues                                                                                                   $9,076,908




                                                                      30
                                                                                  Exhibit B (continued)



                                      AETC-TV Annual Financial Report
                             For the periods ending June 30, 2019 and June 30, 2020
   e. Total From AFS, lines 2a-2d                                                     $14,420,424

   Reconciliation                                                                        2020 data
   3. Difference (line 1 minus line 2)                                                 $-160,636

   4. If the amount on line 3 is not equal to $0,                                      $-160,636
   click the “Add” button and list the reconciling items.
          Description                             Amount
          Misc Transfers for Financial Reporting $-187,106
          Equipment Donation                       $26,475
          Rounding Error                               $-5


Comments
Comment                     Name                            Date        Status




                                                                   31
                                                                                 Exhibit C

                                       AETC-TV
                      Summary of Non-Federal Financial Support
                 For the periods ending June 30, 2019 and June 30, 2020
          Certified by Head of Grantee and Independent Accountant’s Report

Line                    Description                 FY 2019       FY 2020          Total
       Summary of Non-Federal Financial Support:

 1     Direct Revenue (Schedule A)                  $11,351,498    $11,069,400   $22,420,898
 2     Indirect Administrative (Schedule B)

 3     In-Kind Contributions (Schedule C)              476,512         438,761      915,273

 4     Total Non-Federal Financial Support          $11,828,010    $11,508,161   $23,336,171




                                               32
                                                                                                    Exhibit D

                    Veterans Coming Home: Finding What Works - AETC
                                  CPB Grant No. 34732-EDU
                Final Financial Report May 1, 2018 through December 31, 2018

                                                                                                         OIG
                                                                                                      Calculated
                                                                                                     % Variance
                                                                                           AETN      (over) under
Category                                 Actuals         Original         Variance         notes*       budget
Personnel
Executive Producer                             $875            $875                  -
Producer/ editor/ videographer X 4             3,000           4,000             1,000       1)
Digital Distribution Specialist /
Marketing Coordinator X 3                        625             625                 -
Personnel Subtotal                             4,500           5,500             1,000                       18%
Fringe
Position Title
Executive Producer                                 289           289                   -
Producer/ editor/ videographer X 4                 990         1,320                 330     1)
Digital Distribution Specialist /
Marketing Coordinator X 3                        206             206                   -
Fringe Subtotal                                1,485           1,815                 330                     18%
Travel
Local travel
Travel within the state needed for
production of 5 digital content pieces             500         2,000             1,500       1)
Travel Subtotal                                    500         2,000             1,500                       75%
Production
Freelance Production services                 12,063           5,000              7,063      2)
Stock footage / music license fees                               500                500      1)
Equipment rental                                               1,000              1,000      1)
Production Subtotal                           12,063           6,500            (5,563)                    (86%)
Community Engagement Activities
Venue rental                                   1,000           1,500               500       1)
Catering                                       3,155           1,300             1,855       3)
                                                   -             500               500
Community Engagement Activities
Subtotal                                       4,155           3,300             (855)                     (26%)
Marketing / Promotion
Printing                                           -           1,500             1,500
Advertising                                    2,244           3,000               756
Promotion                                        102             535               433
Marketing / Promotion Subtotal                 2,346           5,035             2,689       1)              53%
Research
Literature                                           -              250              250
Research Subtotal                                    -              250              250     1)             100%
Supplies
Office equipment / telephone                       -             300               300
Office supplies                                    -             300               300
Supplies Subtotal                                  -             600               600       1)             100%
TOTAL PROJECT BUDGET                         $25,049         $25,000             ($49)



                                                    33
                                                                                     Exhibit D (continued)

                      Veterans Coming Home: Finding What Works - AETC
                                    CPB Grant No. 34732-EDU
                  Final Financial Report May 1, 2018 through December 31, 2018

*Notes per AETC Final Financial Report
   1) This line was reduced to accommodate additional spending for freelance productions services per AETC
        Executive Director.
   2) Original Budget planned for one freelance crew. Project yielded three freelance crews per Executive
        Director.
   3) This change reflects a larger number of guests than original plan. Also, higher profile guests, so menu
        changed.

Report condensed and reformatted for presentation purposes.




                                                              34
                                                                                         Exhibit E

                                    Scope and Methodology

We performed an attestation examination to determine AETC’s compliance with CPB
Guidelines, provisions of the Act, grant certification requirements, and other grant provisions.
The scope of the examination included reviews and tests of the information reported by the
grantee on its AFRs and reconciled to audited financial statements for the fiscal years ending
June 30, 2019 and 2020; grant certifications of compliance with Act requirements; and
certifications on its financial reports submitted to CPB.

We tested the allowability of NFFS claimed on AETC’s AFRs by performing financial
reconciliations and comparisons to underlying accounting records (general ledger) and the
audited financial statements for AETC and AETNF. We reviewed state appropriations, grants,
underwriting, membership, in-kind, and other contributions, and related supporting
documentation. Specifically, we tested 76 percent of revenue transactions reported on the
grantee’s AFRs including 100 percent of its state appropriations ($10,743,517) as this source
represented over 46 percent of amounts claimed.

We reviewed the allowability of expenses charged to CSGs and other grants. To determine that
expenditures were incurred in accordance with the grant terms, we reviewed $2,228,907 of
$3,974,609 (56.1 percent) expenses reported on the CSG grants. We also tested the Veterans
Coming Home – CPB grant No. 34732 expenditures for compliance with grant terms.

We reviewed corporate policies, records, and documents supporting the station’s compliance
with the Act requirements to provide advance notice of public meetings; provide notice
explaining any closed meetings, make financial and equal employment opportunity information
available to the public; and provide documents supporting compliance with donor lists and
political activities prohibitions. We also reviewed the station’s website and policies to determine
its compliance with CPB’s transparency requirements for eligibility. We also reviewed the
Arkansas Legislative Audit (ALA) and AETNF independent public accountant’s (IPA) audit
planning, internal controls, and attestation working papers. Our procedures included
interviewing grantee and foundation officials.

We gained an understanding of internal controls over the preparation of AFRs, cash receipts, and
cash disbursements. We also gained an understanding of AETC’s policies and procedures for
compliance with certification of eligibility requirements, Act, and CPB grant agreement terms
for allowable costs. We used this information to assess risks and plan the nature and extent of
our testing to conclude on our objectives.

Our fieldwork was conducted from September 2020 through January 2021 and our examination
was performed in accordance with the Government Auditing Standards for attestation
engagement.




                                                35
Exhibit F