Internal Control Material Weakness - Credit Card Transactions
Criteria: Management is responsible for implementing proper internal controls surrounding the cash
disbursement and expenditure process, including maintaining related invoices and receipts, documenting
approval of the expenditure and general ledger coding, and recording all credit card transactions into the
general ledger.
Condition: During our audit, we noted The Baltimore Station, Inc. (the Station) failed to maintain invoices
or receipts for certain credit card transactions.
Cause: Lack of oversight of credit card transactions in which receipts and invoices were unavailable for
each transaction.
Effect: Failure to properly review transactions could result in misuse of credit cards.
Recommendation: We recommend the Station revisit their policies and procedures for credit card usage to
ensure all invoices or receipts are maintained, disbursements and general ledger coding are reviewed and
approved, and all transactions are recorded timely and reconciled to the monthly statement.
Management's Response: See Corrective Action Plan
Internal Control Material Weakness - Financial Reporting, Closing & Board Oversight
Criteria: Management is responsible for implementing proper internal controls surrounding the financial
reporting and closing process on a monthly and annual basis. The reconciliation of bank balances to the
accounting system is the most basic and primary control process performed. Failure to complete accurate
and timely reconciliations may allow for accounting errors, theft, and or fraud to occur without timely
detection. Additionally, failure to provide financial reports to the Board for review in a timely manner
results in ineffective monitoring controls.
Condition: During our audit, we noted the monthly bank reconciliations and monthly financials were not
prepared or reviewed in a timely manner, which led to some transactions not being properly accrued in the
correct accounting period.
Cause: The Station experienced turnover with personnel responsible for preparing and reviewing financial
reports. No backup or contingency plan was in place to ensure financial reporting packages were delivered
to the Board timely for review.
Effect: Failure to complete reconciliations monthly increases the possibility that the Station will not be able
to analyze, classify and record its transactions correctly. Further, the lack of accurate monthly reporting and
review by the Board increases the risk of theft or fraud over the cash cycle and could lead to inaccurate
reporting within the financial statements.
Recommendation: The Station should prepare monthly bank (and other trial balance account)
reconciliations on a timely basis. Any variances should be investigated, documented and corrected. In
addition, the Board should review the monthly financials, including monthly bank reconciliations, and
document the completion of their review and approval.
Management's Response: See Corrective Action Plan
Internal Control Material Weakness – Restricted Revenue Recognition
Criteria: Management is responsible for implementing proper internal controls surrounding restricted
revenue recognition to ensure restricted contributions and satisfaction of restrictions are properly reflected
in the general ledger.
Condition: During our audit, we noted the Station failed to maintain proper supporting documentation for
restricted funding and satisfaction of such restrictions.
Cause: The Station did not have adequate internal controls in effect during the year to track restricted
funding and events satisfying the restrictions.
could lead to improper revenue recognition within the financial statements.
Recommendation: We recommend the Station implement an accounting process whereby all restricted
revenue and corresponding expenditures that satisfy restrictions are maintained and analyzed on a
continuous basis that allows for proper recording in the general ledger.
Management's Response: See Corrective Action Plan
Criteria: An effective system of internal controls and monitoring compliance with federal guidelines should
provide reasonable assurance that financial reporting requirements comply with timeliness requirements.
Condition: During our audit, we noted the Baltimore Station, Inc. failed to timely file its annual Data
Collection Form.
Cause: The Station experienced turnover with personnel responsible for meeting financial reporting
deadlines. No backup or contingency plan was in place to ensure and execute timely filings.
Effect: The Station failed to meet its federal financial reporting deadline. Noncompliance can affect the
Statoin’s ability to obtain federal support for its programs.
Recommendation: Financial reporting requirements should be complied with including timely filings. A
contingency plan may be developed to prevent noncompliance in the future.
Management's Response: See Corrective Action Plan
Internal Control Material Weakness - Credit Card Transactions
Criteria: Management is responsible for implementing proper internal controls surrounding the cash
disbursement and expenditure process, including maintaining related invoices and receipts, documenting
approval of the expenditure and general ledger coding, and recording all credit card transactions into the
general ledger.
Condition: During our audit, we noted The Baltimore Station, Inc. (the Station) failed to maintain invoices
or receipts for certain credit card transactions.
Cause: Lack of oversight of credit card transactions in which receipts and invoices were unavailable for
each transaction.
Effect: Failure to properly review transactions could result in misuse of credit cards.
Recommendation: We recommend the Station revisit their policies and procedures for credit card usage to
ensure all invoices or receipts are maintained, disbursements and general ledger coding are reviewed and
approved, and all transactions are recorded timely and reconciled to the monthly statement.
Management's Response: See Corrective Action Plan
Internal Control Material Weakness - Financial Reporting, Closing & Board Oversight
Criteria: Management is responsible for implementing proper internal controls surrounding the financial
reporting and closing process on a monthly and annual basis. The reconciliation of bank balances to the
accounting system is the most basic and primary control process performed. Failure to complete accurate
and timely reconciliations may allow for accounting errors, theft, and or fraud to occur without timely
detection. Additionally, failure to provide financial reports to the Board for review in a timely manner
results in ineffective monitoring controls.
Condition: During our audit, we noted the monthly bank reconciliations and monthly financials were not
prepared or reviewed in a timely manner, which led to some transactions not being properly accrued in the
correct accounting period.
Cause: The Station experienced turnover with personnel responsible for preparing and reviewing financial
reports. No backup or contingency plan was in place to ensure financial reporting packages were delivered
to the Board timely for review.
Effect: Failure to complete reconciliations monthly increases the possibility that the Station will not be able
to analyze, classify and record its transactions correctly. Further, the lack of accurate monthly reporting and
review by the Board increases the risk of theft or fraud over the cash cycle and could lead to inaccurate
reporting within the financial statements.
Recommendation: The Station should prepare monthly bank (and other trial balance account)
reconciliations on a timely basis. Any variances should be investigated, documented and corrected. In
addition, the Board should review the monthly financials, including monthly bank reconciliations, and
document the completion of their review and approval.
Management's Response: See Corrective Action Plan
Internal Control Material Weakness – Restricted Revenue Recognition
Criteria: Management is responsible for implementing proper internal controls surrounding restricted
revenue recognition to ensure restricted contributions and satisfaction of restrictions are properly reflected
in the general ledger.
Condition: During our audit, we noted the Station failed to maintain proper supporting documentation for
restricted funding and satisfaction of such restrictions.
Cause: The Station did not have adequate internal controls in effect during the year to track restricted
funding and events satisfying the restrictions.
could lead to improper revenue recognition within the financial statements.
Recommendation: We recommend the Station implement an accounting process whereby all restricted
revenue and corresponding expenditures that satisfy restrictions are maintained and analyzed on a
continuous basis that allows for proper recording in the general ledger.
Management's Response: See Corrective Action Plan
Criteria: An effective system of internal controls and monitoring compliance with federal guidelines should
provide reasonable assurance that financial reporting requirements comply with timeliness requirements.
Condition: During our audit, we noted the Baltimore Station, Inc. failed to timely file its annual Data
Collection Form.
Cause: The Station experienced turnover with personnel responsible for meeting financial reporting
deadlines. No backup or contingency plan was in place to ensure and execute timely filings.
Effect: The Station failed to meet its federal financial reporting deadline. Noncompliance can affect the
Statoin’s ability to obtain federal support for its programs.
Recommendation: Financial reporting requirements should be complied with including timely filings. A
contingency plan may be developed to prevent noncompliance in the future.
Management's Response: See Corrective Action Plan