2023-001 Segregation of Duties
Criteria: No one person should have access to both physical assets and the related accounting records or to all phases of a transaction.
Condition: Many of the accounting functions are performed by a few individuals. No approval process in place.
Cause: Limited staff available.
Effect: Material weakness in internal controls. Increased possibility of undetected errors or irregularities. Less likely errors or irregularities would be discovered internally. Financial statement misstatement caused by error or fraud that would not be detected or prevented by management.
Questioned Costs: None noted.
Recommendation: Board of directors remain involved with the review and oversight regarding the Organizations’ financial statements and budgets. Segregate functions between employees and put controls in place so that the accounting functions can be reviewed by someone other than the person recording them. Monthly financial activity such as journal entries, detail of significant asset and liability balances, bank statements and cancelled check images should be reviewed by another member of management for reasonableness.
Views of Responsible Officials and Planned Corrective Actions:
Management has and will continue to review processes to determine where improvements can be made. The board approved segregation of duties diagrams on 10/25/2023. Inspiration has contracted CPA firm, Butler CPA out of Kendallville, Indiana in August 2022. This has enhanced our efficiency, accuracy, and segregation of duties. The board of directors plays an active role in oversight of Inspiration Ministries Inc.’s activities. The monthly board packets include but are not limited to reconciled financial statements such as profit and loss statement and balance sheet.
2023-002 Material Adjustments
Criteria: Management is responsible for preparing financial statements in accordance with the modified cash basis of accounting.
Condition: Insufficient controls over financial reporting. Material audit adjustments were required to prevent the financial statements from being materially misstated.
Cause: Management relied on auditors to propose entries and had not recorded all entries needed at the time of the audit.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports. Some audit adjustments were due to insufficient internal controls over financial reporting, or lack of knowledge with the modified cash basis of accounting to properly make the required adjustment(s). The risk with this condition is that necessary adjustments to the financial statements to record material misstatements may be missed and there is no control in place to detect and correct this condition.
Questioned Costs: None noted.
Recommendation: Improve internal controls to prevent these types of adjustments. Document which accounting procedures are needed to be completed on a recurring basis to detect material adjustments. Management should provide training to make personnel more knowledgeable about their responsibility for the financial statements.
Views of Responsible Officials and Planned Corrective Actions:
Management, with the inclusion of Butler CPA firm, will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements and increase the accuracy of the interim financial reports used by management. The Organization has implemented Administration Responsibilities January 1, 2024, to alleviate all material adjustments and lack of documentation.
2023-003 Lack of Documentation
Criteria: Management is responsible for maintaining sufficient financial records.
Condition: Insufficient documentation maintained by the Organization to support fixed assets, repairs and maintenance and receipts.
Cause: Lack of controls. No document retention and destruction policy in place.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports.
Questioned Costs: None noted.
Recommendation: Implement a document retention and destruction policy which is communicated to all staff. Establish policies and procedures that describe proper supporting documentation for each type of transaction.
Views of Responsible Officials and Planned Corrective Actions:
On June 30, 2022, Inspiration implemented a Document Retention and Destruction Policy that is still currently active and followed.
2023-004 Schedule of Expenditures of Federal Awards
Criteria: CFR Part 200.508 Audit Responsibilities state that the auditee must prepare the Schedule of Expenditures of Federal Awards, which must list individual federal awards by federal agency, including the total federal awards expended, name of pass-through entity, assistance listing number, and total amount provided to subrecipients. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements.
Condition: The Schedule of Expenditures of Federal Awards was prepared by the auditor based on federal award contracts provided by the auditee.
Also, during 2023 an additional federal award was received that management was not aware of.
Cause: Management has limited knowledge on requirements of a Single Audit. Management relied on auditors to prepare the Schedule of Expenditures of Federal Awards.
Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected or corrected.
Questioned Costs: None noted.
Recommendation: Establish procedures to prepare the annual Schedule of Expenditures of Federal Awards and reconcile amounts reported to the Organization's general ledger. The Organization should provide appropriate training to staff who work with government funding.
Views of Responsible Officials and Planned Corrective Actions:
Management will continue to ensure that the Schedule of Expenditures of Federal Awards is complete. Inspiration did prepare the 2023 SEFA, and it was delivered to the auditors immediately in April 2024 at the beginning of our audit.
2023-005 Inadequate Controls Over Related Party Transactions
Criteria: Management is responsible for implementing adequate controls to ensure proper documentation and approval of related party transactions.
Condition: Insufficient controls over related party transactions.
Cause: Lack of controls. No policies or procedures that describe the proper supporting documentation for related party transactions. No policies or procedures that describe the proper review and approval of related party transactions.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports. Could also result in the Organization’s funds being used for nonbusiness related expenses or possible fraud.
Questioned Costs: None noted.
Recommendation: Improve internal controls over related party transactions. Implement written procedures for related party transactions, including required documentation and approval.
Views of Responsible Officials and Planned Corrective Actions:
Management has included Butler CPA to help with accurately reporting and documenting internal and third-party transactions.
2023-006 Negative Operating Cash
Criteria: Management is responsible for implementing adequate controls to spend restricted funds. Management is responsible for implementing adequate controls to ensure proper cash to meet operating needs.
Condition: Insufficient controls over restricted contributions and grants.
Cause: Lack of controls. No process in place to track restricted fund spending.
Effect: Could result in misused funds.
Questioned Costs: None noted.
Recommendation: Improve internal controls over restricted contributions and grants. Implement a system to track revenue and expenses for restricted funds. Request additional funding for general operations.
Views of Responsible Officials and Planned Corrective Actions:
Management has enhanced internal controls over restricted contributions and grants with a system to track revenue and expenses for restricted funds. Inspiration has already hired a compliance administrator with the responsibility of tracking all local, state, and federal grant revenues and expenditures. Inspiration has implemented strategies to increase operating and unrestricted funds through 2024 and 2025 such as but not limited to targeting personal monthly Impact Partners and local Kingdom Church Partners. Inspiration has MOUs in place with local manufactures to implement a workforce pipeline to increase revenue for operations. Inspiration has made a considerable effort to improve cash flow and trim expenses to finish fiscal year 2024 with positive operating cash.
2023-001 Segregation of Duties
Criteria: No one person should have access to both physical assets and the related accounting records or to all phases of a transaction.
Condition: Many of the accounting functions are performed by a few individuals. No approval process in place.
Cause: Limited staff available.
Effect: Material weakness in internal controls. Increased possibility of undetected errors or irregularities. Less likely errors or irregularities would be discovered internally. Financial statement misstatement caused by error or fraud that would not be detected or prevented by management.
Questioned Costs: None noted.
Recommendation: Board of directors remain involved with the review and oversight regarding the Organizations’ financial statements and budgets. Segregate functions between employees and put controls in place so that the accounting functions can be reviewed by someone other than the person recording them. Monthly financial activity such as journal entries, detail of significant asset and liability balances, bank statements and cancelled check images should be reviewed by another member of management for reasonableness.
Views of Responsible Officials and Planned Corrective Actions:
Management has and will continue to review processes to determine where improvements can be made. The board approved segregation of duties diagrams on 10/25/2023. Inspiration has contracted CPA firm, Butler CPA out of Kendallville, Indiana in August 2022. This has enhanced our efficiency, accuracy, and segregation of duties. The board of directors plays an active role in oversight of Inspiration Ministries Inc.’s activities. The monthly board packets include but are not limited to reconciled financial statements such as profit and loss statement and balance sheet.
2023-002 Material Adjustments
Criteria: Management is responsible for preparing financial statements in accordance with the modified cash basis of accounting.
Condition: Insufficient controls over financial reporting. Material audit adjustments were required to prevent the financial statements from being materially misstated.
Cause: Management relied on auditors to propose entries and had not recorded all entries needed at the time of the audit.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports. Some audit adjustments were due to insufficient internal controls over financial reporting, or lack of knowledge with the modified cash basis of accounting to properly make the required adjustment(s). The risk with this condition is that necessary adjustments to the financial statements to record material misstatements may be missed and there is no control in place to detect and correct this condition.
Questioned Costs: None noted.
Recommendation: Improve internal controls to prevent these types of adjustments. Document which accounting procedures are needed to be completed on a recurring basis to detect material adjustments. Management should provide training to make personnel more knowledgeable about their responsibility for the financial statements.
Views of Responsible Officials and Planned Corrective Actions:
Management, with the inclusion of Butler CPA firm, will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements and increase the accuracy of the interim financial reports used by management. The Organization has implemented Administration Responsibilities January 1, 2024, to alleviate all material adjustments and lack of documentation.
2023-003 Lack of Documentation
Criteria: Management is responsible for maintaining sufficient financial records.
Condition: Insufficient documentation maintained by the Organization to support fixed assets, repairs and maintenance and receipts.
Cause: Lack of controls. No document retention and destruction policy in place.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports.
Questioned Costs: None noted.
Recommendation: Implement a document retention and destruction policy which is communicated to all staff. Establish policies and procedures that describe proper supporting documentation for each type of transaction.
Views of Responsible Officials and Planned Corrective Actions:
On June 30, 2022, Inspiration implemented a Document Retention and Destruction Policy that is still currently active and followed.
2023-004 Schedule of Expenditures of Federal Awards
Criteria: CFR Part 200.508 Audit Responsibilities state that the auditee must prepare the Schedule of Expenditures of Federal Awards, which must list individual federal awards by federal agency, including the total federal awards expended, name of pass-through entity, assistance listing number, and total amount provided to subrecipients. The information contained in the Schedule of Expenditures of Federal Awards should be derived from and relate directly to the underlying accounting and other records used to prepare the financial statements.
Condition: The Schedule of Expenditures of Federal Awards was prepared by the auditor based on federal award contracts provided by the auditee.
Also, during 2023 an additional federal award was received that management was not aware of.
Cause: Management has limited knowledge on requirements of a Single Audit. Management relied on auditors to prepare the Schedule of Expenditures of Federal Awards.
Effect: Potential understatement or overstatement of expenditures could exist in the Schedule of Expenditures of Federal Awards and not be detected or corrected.
Questioned Costs: None noted.
Recommendation: Establish procedures to prepare the annual Schedule of Expenditures of Federal Awards and reconcile amounts reported to the Organization's general ledger. The Organization should provide appropriate training to staff who work with government funding.
Views of Responsible Officials and Planned Corrective Actions:
Management will continue to ensure that the Schedule of Expenditures of Federal Awards is complete. Inspiration did prepare the 2023 SEFA, and it was delivered to the auditors immediately in April 2024 at the beginning of our audit.
2023-005 Inadequate Controls Over Related Party Transactions
Criteria: Management is responsible for implementing adequate controls to ensure proper documentation and approval of related party transactions.
Condition: Insufficient controls over related party transactions.
Cause: Lack of controls. No policies or procedures that describe the proper supporting documentation for related party transactions. No policies or procedures that describe the proper review and approval of related party transactions.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports. Could also result in the Organization’s funds being used for nonbusiness related expenses or possible fraud.
Questioned Costs: None noted.
Recommendation: Improve internal controls over related party transactions. Implement written procedures for related party transactions, including required documentation and approval.
Views of Responsible Officials and Planned Corrective Actions:
Management has included Butler CPA to help with accurately reporting and documenting internal and third-party transactions.
2023-006 Negative Operating Cash
Criteria: Management is responsible for implementing adequate controls to spend restricted funds. Management is responsible for implementing adequate controls to ensure proper cash to meet operating needs.
Condition: Insufficient controls over restricted contributions and grants.
Cause: Lack of controls. No process in place to track restricted fund spending.
Effect: Could result in misused funds.
Questioned Costs: None noted.
Recommendation: Improve internal controls over restricted contributions and grants. Implement a system to track revenue and expenses for restricted funds. Request additional funding for general operations.
Views of Responsible Officials and Planned Corrective Actions:
Management has enhanced internal controls over restricted contributions and grants with a system to track revenue and expenses for restricted funds. Inspiration has already hired a compliance administrator with the responsibility of tracking all local, state, and federal grant revenues and expenditures. Inspiration has implemented strategies to increase operating and unrestricted funds through 2024 and 2025 such as but not limited to targeting personal monthly Impact Partners and local Kingdom Church Partners. Inspiration has MOUs in place with local manufactures to implement a workforce pipeline to increase revenue for operations. Inspiration has made a considerable effort to improve cash flow and trim expenses to finish fiscal year 2024 with positive operating cash.