2023-001 Recommend continued evaluation and enhancements to limited segregation of duties over financial reporting
Condition and context: The School is a small entity with limited personnel, ideal internal controls are often not achievable, and inherently, with such entities this creates a reasonable possibility that misstatements and errors (intentional or otherwise) may not be prevented, detected and corrected on a timely basis. The structure of the entity provides for the Director of Business and Finance (Business Manager) to be responsible for the maintenance of the School’s cash (bank accounts) as well as postings within the accounting system (general ledger). Additionally, the Business Manager serves as a Board member and maintains the accounting records of the legally separate fundraising entity the Global Learning Charter Public School Foundation, Inc. which is considered a related entity and component unit of the School. Inherently these functions and duties increase the risks associated with financial reporting. It is important to note the Board of Trustees and management have implemented additional monitoring and oversight procedures involving the Treasurer of the School, reviewing details (vouchers, check registers) prior to actual payment, review of bank reconciliations, on-site inspection of invoices, as well as review of additional monthly financial reporting and other information prior presentation to the full Board. Additionally, management and the Board of Trustees have adopted and implemented a more formalized policies and procedures manual surrounding administration of federal award programs, the template for which they initially received from the Commonwealth of Massachusetts’s Department of Elementary and Secondary Education.
Effect or potential effect: Limited segregation of duties surrounding financial recording and reporting create a reasonable possibility that misstatements and errors (intentional or otherwise) which could affect the financial position of the School are not prevented, detected, and corrected in a timely manner.
Cause: The School is a small entity with limited personnel.
Criteria:Internal controls surrounding financial reporting and compliance should be established which provide misstatements, errors, noncompliance are prevented, detected, and corrected in a timely manner.
Identification as a repeat finding:This is a similar finding as reported in the immediate prior year; as indicated above, the School has addressed certain corrective action toward.
Auditor’s recommendations:In our professional opinion, under current accounting and auditing standards, limited segregation of duties are inherently considered to be a significant deficiency. While s improvements have been made, due to the inherent nature of the School’s current structure, it is important for management and the Board to continually evaluate additional enhancements and review of established policies and procedures to ensure risks are minimized as best possible (cost benefit) and to acceptable levels. § Organizational and operational structure of the Foundation and the in relationship to the School. (Business Manager lack of segregation of duties).§ Evaluate more formalized budget and actual reporting directly from the computerized financial management system; limiting the use of decentralized creation of summaries and reports, which will allow for more streamlined reporting of activity; inclusive of adaption of revised chart of accounts to streamline the process.§ More formal documentation within Board minutes of overall review activities.§ Board approval of non-standard journal entries (reclassifying entries).§ Enhanced reporting of receipts/supporting documentation of amounts collected by individuals and subsequently turned in for deposit.§ We recommend evaluation of use of debit card linked to School’s account. While utilized to a limited extent, management should evaluate risks/benefits (debit card direct access to account funds) against other methodologies (i.e., credit card). Management should evaluate with financial institution.§ We recommend management continue to review adopted policies and procedures surrounding federal award programs and compliance thereto, be enhanced by additional review to OMB Uniform Guidance and the Compliance Supplement to further delineate procedures directly with OMB guidance and the applicable requirements associated with each federal award program the School receives annually. The School should enhance the documentation of sole source vendors and associated procurements under state contracts.§ The School should enhance documentation of sole source vendors and associated state contracts.The annual assessment of the design, implementation and effectiveness of internal control policies and procedures is the ongoing responsibility of management and the Board of Trustees. Formal documentation of this assessment and associated risk assessment should be formally documented annually.
2023-002 Recommend continued evaluation and enhancements to limited segregation of duties over financial reporting.
Additional details associated with the referenced finding (2023-001) can be found in the Financial Statements Finding section above.
Condition:In summary, the School has limited segregation of duties over financial reporting and compliance. In the previous fiscal year (fiscal year 2022), management and the Board of Trustees implemented additional enhancements, inclusive of a formalized federal grants management procedures manual. The Uniform Guidance states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statues, regulations, and terms and conditions of the federal award. While the School’s adopted federal grants management provides generalized procedures surrounding some aspects of grants management, in our professional judgement, continued additional steps should be taken to more clearly address specific compliance requirements associated with each of the programs/awards the School participates in and overall additional procedures which ensure compliance and timely documentation thereof of compliance with such requirements.
2023-001 Recommend continued evaluation and enhancements to limited segregation of duties over financial reporting
Condition and context: The School is a small entity with limited personnel, ideal internal controls are often not achievable, and inherently, with such entities this creates a reasonable possibility that misstatements and errors (intentional or otherwise) may not be prevented, detected and corrected on a timely basis. The structure of the entity provides for the Director of Business and Finance (Business Manager) to be responsible for the maintenance of the School’s cash (bank accounts) as well as postings within the accounting system (general ledger). Additionally, the Business Manager serves as a Board member and maintains the accounting records of the legally separate fundraising entity the Global Learning Charter Public School Foundation, Inc. which is considered a related entity and component unit of the School. Inherently these functions and duties increase the risks associated with financial reporting. It is important to note the Board of Trustees and management have implemented additional monitoring and oversight procedures involving the Treasurer of the School, reviewing details (vouchers, check registers) prior to actual payment, review of bank reconciliations, on-site inspection of invoices, as well as review of additional monthly financial reporting and other information prior presentation to the full Board. Additionally, management and the Board of Trustees have adopted and implemented a more formalized policies and procedures manual surrounding administration of federal award programs, the template for which they initially received from the Commonwealth of Massachusetts’s Department of Elementary and Secondary Education.
Effect or potential effect: Limited segregation of duties surrounding financial recording and reporting create a reasonable possibility that misstatements and errors (intentional or otherwise) which could affect the financial position of the School are not prevented, detected, and corrected in a timely manner.
Cause: The School is a small entity with limited personnel.
Criteria:Internal controls surrounding financial reporting and compliance should be established which provide misstatements, errors, noncompliance are prevented, detected, and corrected in a timely manner.
Identification as a repeat finding:This is a similar finding as reported in the immediate prior year; as indicated above, the School has addressed certain corrective action toward.
Auditor’s recommendations:In our professional opinion, under current accounting and auditing standards, limited segregation of duties are inherently considered to be a significant deficiency. While s improvements have been made, due to the inherent nature of the School’s current structure, it is important for management and the Board to continually evaluate additional enhancements and review of established policies and procedures to ensure risks are minimized as best possible (cost benefit) and to acceptable levels. § Organizational and operational structure of the Foundation and the in relationship to the School. (Business Manager lack of segregation of duties).§ Evaluate more formalized budget and actual reporting directly from the computerized financial management system; limiting the use of decentralized creation of summaries and reports, which will allow for more streamlined reporting of activity; inclusive of adaption of revised chart of accounts to streamline the process.§ More formal documentation within Board minutes of overall review activities.§ Board approval of non-standard journal entries (reclassifying entries).§ Enhanced reporting of receipts/supporting documentation of amounts collected by individuals and subsequently turned in for deposit.§ We recommend evaluation of use of debit card linked to School’s account. While utilized to a limited extent, management should evaluate risks/benefits (debit card direct access to account funds) against other methodologies (i.e., credit card). Management should evaluate with financial institution.§ We recommend management continue to review adopted policies and procedures surrounding federal award programs and compliance thereto, be enhanced by additional review to OMB Uniform Guidance and the Compliance Supplement to further delineate procedures directly with OMB guidance and the applicable requirements associated with each federal award program the School receives annually. The School should enhance the documentation of sole source vendors and associated procurements under state contracts.§ The School should enhance documentation of sole source vendors and associated state contracts.The annual assessment of the design, implementation and effectiveness of internal control policies and procedures is the ongoing responsibility of management and the Board of Trustees. Formal documentation of this assessment and associated risk assessment should be formally documented annually.
2023-002 Recommend continued evaluation and enhancements to limited segregation of duties over financial reporting.
Additional details associated with the referenced finding (2023-001) can be found in the Financial Statements Finding section above.
Condition:In summary, the School has limited segregation of duties over financial reporting and compliance. In the previous fiscal year (fiscal year 2022), management and the Board of Trustees implemented additional enhancements, inclusive of a formalized federal grants management procedures manual. The Uniform Guidance states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statues, regulations, and terms and conditions of the federal award. While the School’s adopted federal grants management provides generalized procedures surrounding some aspects of grants management, in our professional judgement, continued additional steps should be taken to more clearly address specific compliance requirements associated with each of the programs/awards the School participates in and overall additional procedures which ensure compliance and timely documentation thereof of compliance with such requirements.