Audit 348423

Finding 2024-001 – Segregation of Duties (Material Weakness) Criteria The Organization is responsible for ensuring they maintain appropriate segregation of duties to mitigate any one individual from handling all aspects of the transaction cycles. Conditions and Context Due to the staff turnover in the Finance and Administration Departments, the finance officer has become responsible for most of the accounting functions to include cash receipts, cash disbursements, payroll, accruals, all journal entries, and financial statement preparation. Additionally, he opens the mail and reconciles the bank statements. Effect The Organization does not have mitigating controls to ensure that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Recommendation We recommended that the Organization uses the segregation matrix as it continues to restructure staffing to ensure that no one person is responsible for all the components of a transaction cycle. Until segregation of duties are effectively put in place, we recommend the Executive Director and/or a Board member be utilized to share responsibilities. Agency Response: LearningWorks is utilizing a temporary plan that engages existing staff in aspects of segregation. The recently revised Finance Manual includes a full matrix that explicitly includes additional finance staff to ensure segregation of duties through the transaction cycle. LearningWorks is committed to and engaged in hiring a Finance Associate. The agency will incorporate these criteria and the matrix in our routine operations. Additionally, we are willing to institute further recommended practices that will remediate this finding.

Finding 2024-002 – Controls over Monitoring (Material Weakness) Criteria The Organization is responsible for designing controls that meet industry and Uniform Guidance standards through evidential documentation to support that the control was performed. Conditions and Context We noted in our review of controls and walkthroughs of major transaction cycles that there was no evidence that bank reconciliations and general journal entries prepared by the Finance Officer were reviewed and approved by another member of management. Effect The Organization lacks adequate support and monitoring controls to meet industry and Uniform Guidance standards. Recommendation We recommend controls be improved by documenting the reviews of all reconciliations and general journal entries each month. One suggestion is to create a monthly close checklist which lists all the items to be reviewed and have the person who prepares the reconciliation or entry and the person who reviews it sign and date as the items are completed. Agency Response: LearningWorks has been working with an external accounting consultant since July of 2024. This seasoned CPA with valuable experience in nonprofit financial management has offered counsel and support with various issues. Moving forward, her support will include developing and executing a monthly review process in order to meet industry and Uniform Guidance standards. Additionally, we are willing to institute further recommended practices that will remediate this finding.

Finding 2024-001 – Segregation of Duties (Material Weakness) Criteria The Organization is responsible for ensuring they maintain appropriate segregation of duties to mitigate any one individual from handling all aspects of the transaction cycles. Conditions and Context Due to the staff turnover in the Finance and Administration Departments, the finance officer has become responsible for most of the accounting functions to include cash receipts, cash disbursements, payroll, accruals, all journal entries, and financial statement preparation. Additionally, he opens the mail and reconciles the bank statements. Effect The Organization does not have mitigating controls to ensure that no one employee has access to both physical assets and the related accounting records, or to all phases of a transaction. Recommendation We recommended that the Organization uses the segregation matrix as it continues to restructure staffing to ensure that no one person is responsible for all the components of a transaction cycle. Until segregation of duties are effectively put in place, we recommend the Executive Director and/or a Board member be utilized to share responsibilities. Agency Response: LearningWorks is utilizing a temporary plan that engages existing staff in aspects of segregation. The recently revised Finance Manual includes a full matrix that explicitly includes additional finance staff to ensure segregation of duties through the transaction cycle. LearningWorks is committed to and engaged in hiring a Finance Associate. The agency will incorporate these criteria and the matrix in our routine operations. Additionally, we are willing to institute further recommended practices that will remediate this finding.

Finding 2024-002 – Controls over Monitoring (Material Weakness) Criteria The Organization is responsible for designing controls that meet industry and Uniform Guidance standards through evidential documentation to support that the control was performed. Conditions and Context We noted in our review of controls and walkthroughs of major transaction cycles that there was no evidence that bank reconciliations and general journal entries prepared by the Finance Officer were reviewed and approved by another member of management. Effect The Organization lacks adequate support and monitoring controls to meet industry and Uniform Guidance standards. Recommendation We recommend controls be improved by documenting the reviews of all reconciliations and general journal entries each month. One suggestion is to create a monthly close checklist which lists all the items to be reviewed and have the person who prepares the reconciliation or entry and the person who reviews it sign and date as the items are completed. Agency Response: LearningWorks has been working with an external accounting consultant since July of 2024. This seasoned CPA with valuable experience in nonprofit financial management has offered counsel and support with various issues. Moving forward, her support will include developing and executing a monthly review process in order to meet industry and Uniform Guidance standards. Additionally, we are willing to institute further recommended practices that will remediate this finding.