Audit 311602

Audit Adjustments and Oversight of Financial Proces. Material Weeakness. Criteria – in accordance with generally accepted accounting principles in the United States of America (GAAP) and best practices for nonprofit organizations, internal controls over financial reporting should be designed to ensure that transactions are recorded in the proper period and properly classified and that the closing process identifies any necessary adjustments. Condition – the closing processes did not identify material audit adjustments that were required to accurately reflect grants receivable and related government grant/contribution revenue account, refundable advances and related government grant revenue account, and payroll and payroll taxes expenses. Context – Management is responsible for the recording, processing, summarizing, and review of accounting data (i.e., maintaining books and records) and for making necessary adjustments to those books and records before the audit and preparation of financial statements. Cause – During the year, there were still unexpected COVID-19 related implications on the Organization on multiple levels, QuickBooks software financial systems were corrupted, and an increase of limited finance team workload. Effect – errors in recording transactions to the proper period and general ledger accounts could result in a misstatement of the financial statements. Recommendation – We recommend that the Organization management implement controls over the financial closing process to ensure all necessary adjustments at fiscal year-end are recorded and reviewed, so the financial statements are free from material misstatements. View of Responsible Officials and Corrective Action Plan – The Organization recognizes the financial statement finding identified and we have taken corrective actions to ensure the accuracy of our financial controls and procedures moving forward. After the fiscal year ended in 2022, there has been a change in leadership within our financial department. With this transition, adjustments have been made to the financial procedures and controls to address potential lapses in the closing process. The Organization has revised the way it records, reconciles, and review financial entries. These changes were necessary to ensure proper U.S. GAAP practices were in place. These updates include accurately accruing accounts payable and accounts receivable, to ensure revenue and expenses are recognized in the proper period. We have also implemented a proper review process of the financial statements and any adjustments that are required to finalize them. The Organization believes it have fully addressed and corrected all procedures that led to this finding.

Noncompliance with Laws and Regulations. Criteria – Under 2 CFR 200.512, auditee must submit single audit data collection and reporting package to the Federal Audit Clearinghouse within the earlier of 30 calendar days after the receipt of auditor’s report or nine months after the end of audit period. Condition – Accounting records were not complete and not readily available to schedule the audit. Also, major health challenges to the Executive Director family member, and audit firm availability contributed to the scheduling delays. The single audit reporting package was submitted twelve months after the June 30, 2023, due date. Context – Management is responsible for reviewing accounting data for making necessary adjustments, and preparation of financial statements for timely audit engagement and submission to the Federal Audit Clearinghouse. Cause – this is the first Single Audit for the Organization, experienced turnover of key staff within the accounting department and their lack of understanding of the extent of Single Audit, and major health challenges to the Executive Director family member. Recommendation – We recommend that the Organization obtain appropriate experienced accounting staff, implement systems and procedures to ensure timely completion of the Single Audit and the submission of the reporting package to the Federal Clearinghouse. View of Responsible Officials and Corrective Action Plan – This is the first Single Audit for our Organization. To ensure that the Organization complies with the laws and regulations of the Single Audit, the CFO will track, review, and verify all federal and non-federal awards. The CFO will also review the closing process of the financial statements and make adjustments that are required to finalize them. The CFO will ensure that the Organization submits timely single audit data collection and reporting package to the Federal Audit Clearinghouse.

Audit Adjustments and Oversight of Financial Proces. Material Weeakness. Criteria – in accordance with generally accepted accounting principles in the United States of America (GAAP) and best practices for nonprofit organizations, internal controls over financial reporting should be designed to ensure that transactions are recorded in the proper period and properly classified and that the closing process identifies any necessary adjustments. Condition – the closing processes did not identify material audit adjustments that were required to accurately reflect grants receivable and related government grant/contribution revenue account, refundable advances and related government grant revenue account, and payroll and payroll taxes expenses. Context – Management is responsible for the recording, processing, summarizing, and review of accounting data (i.e., maintaining books and records) and for making necessary adjustments to those books and records before the audit and preparation of financial statements. Cause – During the year, there were still unexpected COVID-19 related implications on the Organization on multiple levels, QuickBooks software financial systems were corrupted, and an increase of limited finance team workload. Effect – errors in recording transactions to the proper period and general ledger accounts could result in a misstatement of the financial statements. Recommendation – We recommend that the Organization management implement controls over the financial closing process to ensure all necessary adjustments at fiscal year-end are recorded and reviewed, so the financial statements are free from material misstatements. View of Responsible Officials and Corrective Action Plan – The Organization recognizes the financial statement finding identified and we have taken corrective actions to ensure the accuracy of our financial controls and procedures moving forward. After the fiscal year ended in 2022, there has been a change in leadership within our financial department. With this transition, adjustments have been made to the financial procedures and controls to address potential lapses in the closing process. The Organization has revised the way it records, reconciles, and review financial entries. These changes were necessary to ensure proper U.S. GAAP practices were in place. These updates include accurately accruing accounts payable and accounts receivable, to ensure revenue and expenses are recognized in the proper period. We have also implemented a proper review process of the financial statements and any adjustments that are required to finalize them. The Organization believes it have fully addressed and corrected all procedures that led to this finding.

Noncompliance with Laws and Regulations. Criteria – Under 2 CFR 200.512, auditee must submit single audit data collection and reporting package to the Federal Audit Clearinghouse within the earlier of 30 calendar days after the receipt of auditor’s report or nine months after the end of audit period. Condition – Accounting records were not complete and not readily available to schedule the audit. Also, major health challenges to the Executive Director family member, and audit firm availability contributed to the scheduling delays. The single audit reporting package was submitted twelve months after the June 30, 2023, due date. Context – Management is responsible for reviewing accounting data for making necessary adjustments, and preparation of financial statements for timely audit engagement and submission to the Federal Audit Clearinghouse. Cause – this is the first Single Audit for the Organization, experienced turnover of key staff within the accounting department and their lack of understanding of the extent of Single Audit, and major health challenges to the Executive Director family member. Recommendation – We recommend that the Organization obtain appropriate experienced accounting staff, implement systems and procedures to ensure timely completion of the Single Audit and the submission of the reporting package to the Federal Clearinghouse. View of Responsible Officials and Corrective Action Plan – This is the first Single Audit for our Organization. To ensure that the Organization complies with the laws and regulations of the Single Audit, the CFO will track, review, and verify all federal and non-federal awards. The CFO will also review the closing process of the financial statements and make adjustments that are required to finalize them. The CFO will ensure that the Organization submits timely single audit data collection and reporting package to the Federal Audit Clearinghouse.