2022-01 (Material weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Prior year balances in Quickbooks Online accounting software were incorrect based on the prior year audit report financial statements. The client made prior period adjustments dating back several years, causing net assets to roll forward incorrectly. Context: Deficiency was discovered while performing substantive testing on prior year balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization should have a process for reviewing prior year balances in their Quickbooks Online accounting software to ensure that they match to the audited financial statements. The organization should refrain from making changes to their financials once financial statements for the period under audit have been issued and closed. This is a repeat finding. Response: We acknowledge that there is currently not a sufficient process in place to review Quickbooks Online balances. A policy will be implemented to review prior year Quickbooks Online balances to ensure that they match to the audited financial statements now that the Organization has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.
2022-02 Material Weakness Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Management decided that a payable to a related party was not supportable and extinguished the debt on its books. The other entity did not confirm that the debt is incorrect or forgiven. Context: Deficiency was discovered while performing substantive testing on liability balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Management did not obtain written documentation to support its position to extinguish the debt from its accounting records. Recommendation: The Organization should obtain a legally binding document prior to recording a debt extinguishment. Response: We acknowledge and will receive formal documentation that will legally forgive the debt or formalize the promissory note
2022-03 (Material Weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Current year activity in real estate and payable accounts were not properly recorded. Expenditures to improve buildings was erroneously recorded to repairs and depreciation expenses was not recorded. Expenditures invoiced prior to year-end but not yet paid were not properly recorded as accrued liabilities. Context: Deficiency was discovered while performing substantive testing on real estate balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions. The Organization should review its transactions invoiced but not paid prior to year end in order to properly record accrued liabilities. Response: We acknowledge that there is currently not a sufficient process in place to ensure that capital expenditures and accounts payable are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and accounts payable are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.
2022-03 (Material Weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Current year activity in real estate and payable accounts were not properly recorded. Expenditures to improve buildings was erroneously recorded to repairs and depreciation expenses was not recorded. Expenditures invoiced prior to year-end but not yet paid were not properly recorded as accrued liabilities. Context: Deficiency was discovered while performing substantive testing on real estate balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions. The Organization should review its transactions invoiced but not paid prior to year end in order to properly record accrued liabilities. Response: We acknowledge that there is currently not a sufficient process in place to ensure that capital expenditures and accounts payable are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and accounts payable are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.
2022-05 (Significant Deficiency) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that all compliance requirements are followed, including filing the audit of the financial statements and Single Audit reports with the Federal Award Clearinghouse within the earlier of 30 days after completion of the audit or nine months after year-end. Condition: Management did not have the audit completed within the required timeframe, such that the filing with the Clearinghouse will be late. Context: Deficiency was discovered while performing audit for Organization. Effect: The audit was performed after the due date and therefore, the filing with the Clearinghouse was late. Cause: The Organization engaged a third-party accounting firm to make accounting corrections for the period July 2020 through the current accounting period. This process helped the Organization address several findings from the June 30, 2021, audit. The accounting firm did not complete their corrections until January 2023. The CPA firm that audits the Organizations financial records did not have available staff to start the June 30, 2022, year-end audit until April 2023. As a result, the audit was not completed by the Clearinghouse?s required due date. Recommendation: The Organization is continuing to engage a third-party accounting firm to assist in recording accounting transactions for the Organization. Because the accounting firm has worked all year with the Organization expects the June 30, 2023, and future year-end closings to be prepared and delivered to the CPA audit firm sooner so that the audit can be submitted to the Clearinghouse well in advance of the required due date. Response: The Organization is currently on pace to meet the Clearinghouse filing deadline.
2022-01 (Material weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Prior year balances in Quickbooks Online accounting software were incorrect based on the prior year audit report financial statements. The client made prior period adjustments dating back several years, causing net assets to roll forward incorrectly. Context: Deficiency was discovered while performing substantive testing on prior year balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization should have a process for reviewing prior year balances in their Quickbooks Online accounting software to ensure that they match to the audited financial statements. The organization should refrain from making changes to their financials once financial statements for the period under audit have been issued and closed. This is a repeat finding. Response: We acknowledge that there is currently not a sufficient process in place to review Quickbooks Online balances. A policy will be implemented to review prior year Quickbooks Online balances to ensure that they match to the audited financial statements now that the Organization has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.
2022-02 Material Weakness Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Management decided that a payable to a related party was not supportable and extinguished the debt on its books. The other entity did not confirm that the debt is incorrect or forgiven. Context: Deficiency was discovered while performing substantive testing on liability balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Management did not obtain written documentation to support its position to extinguish the debt from its accounting records. Recommendation: The Organization should obtain a legally binding document prior to recording a debt extinguishment. Response: We acknowledge and will receive formal documentation that will legally forgive the debt or formalize the promissory note
2022-03 (Material Weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Current year activity in real estate and payable accounts were not properly recorded. Expenditures to improve buildings was erroneously recorded to repairs and depreciation expenses was not recorded. Expenditures invoiced prior to year-end but not yet paid were not properly recorded as accrued liabilities. Context: Deficiency was discovered while performing substantive testing on real estate balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions. The Organization should review its transactions invoiced but not paid prior to year end in order to properly record accrued liabilities. Response: We acknowledge that there is currently not a sufficient process in place to ensure that capital expenditures and accounts payable are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and accounts payable are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.
2022-03 (Material Weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Current year activity in real estate and payable accounts were not properly recorded. Expenditures to improve buildings was erroneously recorded to repairs and depreciation expenses was not recorded. Expenditures invoiced prior to year-end but not yet paid were not properly recorded as accrued liabilities. Context: Deficiency was discovered while performing substantive testing on real estate balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions. The Organization should review its transactions invoiced but not paid prior to year end in order to properly record accrued liabilities. Response: We acknowledge that there is currently not a sufficient process in place to ensure that capital expenditures and accounts payable are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and accounts payable are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.
2022-05 (Significant Deficiency) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that all compliance requirements are followed, including filing the audit of the financial statements and Single Audit reports with the Federal Award Clearinghouse within the earlier of 30 days after completion of the audit or nine months after year-end. Condition: Management did not have the audit completed within the required timeframe, such that the filing with the Clearinghouse will be late. Context: Deficiency was discovered while performing audit for Organization. Effect: The audit was performed after the due date and therefore, the filing with the Clearinghouse was late. Cause: The Organization engaged a third-party accounting firm to make accounting corrections for the period July 2020 through the current accounting period. This process helped the Organization address several findings from the June 30, 2021, audit. The accounting firm did not complete their corrections until January 2023. The CPA firm that audits the Organizations financial records did not have available staff to start the June 30, 2022, year-end audit until April 2023. As a result, the audit was not completed by the Clearinghouse?s required due date. Recommendation: The Organization is continuing to engage a third-party accounting firm to assist in recording accounting transactions for the Organization. Because the accounting firm has worked all year with the Organization expects the June 30, 2023, and future year-end closings to be prepared and delivered to the CPA audit firm sooner so that the audit can be submitted to the Clearinghouse well in advance of the required due date. Response: The Organization is currently on pace to meet the Clearinghouse filing deadline.