Attachment B NKCC FY22 Management Letter.pdf

June 9, 2023

Gretchen Landrum, Executive Director Northern Kentucky Convention Center Corporation 1 W Rivercenter Blvd Covington, KY 41011

Dear Gretchen Landrum, We have audited the Northern Kentucky Convention Center Corporation (NKCC) for the year ended June 30, 2022. Our procedures included testing certain activities of the NKCC for compliance and internal control over financial reporting, and our findings and recommendations related to those procedures are reported as described below.

Internal Control

In planning and performing our audit of the financial statements, in accordance with auditing standards generally accepted in the United States of America, we considered the NKCC’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the Commonwealth’s financial statements, but not for the purpose of expressing an opinion on the effectiveness of the NKCC’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Commonwealth’s or the NKCC’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Gretchen Landrum, Executive Director Northern Kentucky Convention Center Corporation

Our consideration of internal control was for the limited purpose described above and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. All material weaknesses and significant deficiencies over financial reporting noted during our audit, including those related to the NKCC, if any, are reported in the audit report dated June 9, 2023. Control deficiencies identified in our audit for the NKCC that were not classified as either significant deficiencies or material weaknesses are attached to this letter.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether NKCC’s financial statements are free of material misstatement, we performed tests of its compliance with certain laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. All material noncompliances, as well as material instances of fraud, abuse or other matters related to financial reporting noted during our audit, including those related to the NKCC, if any, are reported in the audit report dated June 9, 2023.

This communication is intended solely for the information and use of management, those charged with governance, and others within the organization and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully Submitted, Farrah Petter Assistant Auditor of Public Accounts

FINANCIAL STATEMENT FINDINGS

Deficiencies Relating to Internal Controls and/or Noncompliances

FINDING 2022-NKCC-001: Northern Kentucky Convention Center Corporation Did Not Inventory All Capital Assets

The Northern Kentucky Convention Center Corporation (NKCC) owns and maintains capital assets to assist in providing clients additional services with their convention reservation. NKCC inventories their capital assets annually to ensure all items recorded in the accounting system exist. During fiscal year (FY) 2022, NKCC did not include new purchases of three refrigerators or 100 table skims in the annual inventory count. These items were purchased by a business partner that provides food services for the convention clients; however, NKCC owns and maintains all the items purchased under this agreement.

NKCC does not have policies and procedures in place to ensure capital assets purchased from business partners are inventoried annually.

Although the items not inventoried were correctly included in the financial statements, without internal controls to ensure each reported capital asset exists, the capital asset balance in the financial statements could be misstated.

Sound internal controls over the inventory of capital assets helps ensure the balance recorded in the accounting system contains complete and accurate information for financial reporting.

A complete and accurate capital asset listing is necessary in order to ensure financial statement reporting requirements are met in accordance with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) pronouncements.

Recommendation

We recommend all capital assets owned and maintained by NKCC are included in the annual inventory. If purchases or disposals are made during the year, NKCC should update their inventory list to reflect such changes.

Management’s Response

NKYCC requires all equipment to be inventoried by our third-party vendor. This inventory will reside with inventory counts for each department holding equipment. The inventory is completed annually and will be placed into a file so it can be reviewed the following year. Fixed assets will be migrated to fixed asset software in conjunction with MCM CPA’s and Advisors beginning on July 1, 2023.