Audit 297400

FY End
2023-06-30
Total Expended
$10.15M
Findings
10
Programs
5
Organization: Manhattan School of Music (NY)
Year: 2023 Accepted: 2024-03-25
Auditor: Crowe LLP

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
384247 2023-003 Significant Deficiency - C
384248 2023-004 Material Weakness - L
384249 2023-005 Significant Deficiency Yes N
384250 2023-001 Material Weakness - P
384251 2023-002 Significant Deficiency - P
960689 2023-003 Significant Deficiency - C
960690 2023-004 Material Weakness - L
960691 2023-005 Significant Deficiency Yes N
960692 2023-001 Material Weakness - P
960693 2023-002 Significant Deficiency - P

Programs

ALN Program Spent Major Findings
84.268 Federal Direct Student Loans $9.16M Yes 1
84.138 Federal Perkins Loan Program $488,846 Yes 1
84.063 Federal Pell Grant Program $330,097 Yes 1
84.033 Federal Work-Study Program $97,909 Yes 1
84.007 Federal Supplemental Educational Opportunity Grants $75,195 Yes 1

Contacts

Name Title Type
VVWCW5BPNGC6 Nathan Mortimer Auditee
9174934456 Kelly Frank Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1 - BASIS OF PRESENTATION Accounting Policies: NOTE 1 - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the activity of Manhattan School of Music (the "School") for the year ended June 30, 2023 and is presented on the accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The School has elected to not use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Not applicable The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the activity of Manhattan School of Music (the "School") for the year ended June 30, 2023 and is presented on the accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The School has elected to not use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.
Title: NOTE 2 - FEDERAL LOAN PROGRAMS Accounting Policies: NOTE 1 - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the activity of Manhattan School of Music (the "School") for the year ended June 30, 2023 and is presented on the accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The School has elected to not use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Not applicable The amount presented for the Federal Perkins Loan Program represents loan balances outstanding of $488,846 at June 30, 2022 for which the government imposes continuing compliance requirements. No disbursements are permitted under the Federal Perkins Loan Program after June 30, 2019. The loan balances outstanding amount to $0 as of June 30, 2023. The School participates in the Federal Direct Student Loans Program and Federal PLUS Loans (PLUS). The dollar amounts are listed in the schedule of federal awards although the School is not the recipient of the funds. The amounts presented represents the value of new Federal Direct Student Loans awarded during the year as follows: Subsidized $643,826 Unsubsidized $2,669,439 PLUS $5,843,228 Total $9,156,493
Title: NOTE 3 – RELATED PARTY TRANSACTIONS Accounting Policies: NOTE 1 - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the activity of Manhattan School of Music (the "School") for the year ended June 30, 2023 and is presented on the accrual basis of accounting. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The School has elected to not use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Not applicable The School periodically engages in transactions with related parties which are not considered material to the financial statements.

Finding Details

During fiscal year ended June 30, 2023, reconciliations of the direct loans were done on an annual basis instead of monthly as prescribed.
The information included in FISAP should agree with the School’s records. However, several variances were noted in comparison to School's records, as follows: 1) For fiscal year ending June 30, 2022, the most recent FISAP submitted during fiscal year ending June 30, 2023, Federal Work Study’s (FWS) institutional and federal share did not agree to the general ledger. FISAP disclosed $47,927 and $86,616 of Institutional and Federal Share, respectively, while the School's general ledger included a total of $35,366 and $97,909 of Institutional and Federal Share, respectively. This resulted in a variance of $12,561 and $(11,293) of Institutional and Federal Share, respectively; 2) Part II, Section A, line 22 included total tuition and fees of $48,931,400 as compared to the School's trial balance of $49,648,675. This resulted in a variance of $717,275; 3) Part III, Sections A and B included various differences in comparison to the ECSI report and trial balance, as illustrated below:
For one out of fifteen samples tested, the students’ status was not reported to NSLDS. Additionally, the submission was not made in a timely manner. The student’s status change was reported to NSLDS more than a year after the change and after the student was selected for testing.
Condition: During the audit of several key transaction cycles, it was noted that management did not have adequate controls in place over financial reporting, specifically the journal entry process, to allow for timely and accurate financial reporting, resulting in an audit adjustment being posted by management. Context: As a result of audit procedures performed, several accounts had to be adjusted to recognize the appropriate balances at year-end. These accounts included cash with negative balances, accounts receivable with negative balances, accounts payable with positive balances. Also, the accounts receivable allowance for doubtful accounts balance was greater than the gross accounts receivable and the unearned revenue account had a positive balance. Total adjustment aggregated to $2,491,439.
Condition: During the audit of net assets, several adjustments were made to the endowment portfolio to reflect the appropriate net assets with donor restrictions balance at year-end. Context: As a result of audit procedures performed, several corrections related to the endowment portfolio were made which is attributable to inadequate review process and monitoring over endowment. The review oversight stemmed from high turnover within the Finance Department.
During fiscal year ended June 30, 2023, reconciliations of the direct loans were done on an annual basis instead of monthly as prescribed.
The information included in FISAP should agree with the School’s records. However, several variances were noted in comparison to School's records, as follows: 1) For fiscal year ending June 30, 2022, the most recent FISAP submitted during fiscal year ending June 30, 2023, Federal Work Study’s (FWS) institutional and federal share did not agree to the general ledger. FISAP disclosed $47,927 and $86,616 of Institutional and Federal Share, respectively, while the School's general ledger included a total of $35,366 and $97,909 of Institutional and Federal Share, respectively. This resulted in a variance of $12,561 and $(11,293) of Institutional and Federal Share, respectively; 2) Part II, Section A, line 22 included total tuition and fees of $48,931,400 as compared to the School's trial balance of $49,648,675. This resulted in a variance of $717,275; 3) Part III, Sections A and B included various differences in comparison to the ECSI report and trial balance, as illustrated below:
For one out of fifteen samples tested, the students’ status was not reported to NSLDS. Additionally, the submission was not made in a timely manner. The student’s status change was reported to NSLDS more than a year after the change and after the student was selected for testing.
Condition: During the audit of several key transaction cycles, it was noted that management did not have adequate controls in place over financial reporting, specifically the journal entry process, to allow for timely and accurate financial reporting, resulting in an audit adjustment being posted by management. Context: As a result of audit procedures performed, several accounts had to be adjusted to recognize the appropriate balances at year-end. These accounts included cash with negative balances, accounts receivable with negative balances, accounts payable with positive balances. Also, the accounts receivable allowance for doubtful accounts balance was greater than the gross accounts receivable and the unearned revenue account had a positive balance. Total adjustment aggregated to $2,491,439.
Condition: During the audit of net assets, several adjustments were made to the endowment portfolio to reflect the appropriate net assets with donor restrictions balance at year-end. Context: As a result of audit procedures performed, several corrections related to the endowment portfolio were made which is attributable to inadequate review process and monitoring over endowment. The review oversight stemmed from high turnover within the Finance Department.