Segregation of Duties
Criteria: A basic internal control over financial reporting is the segregation of duties of transaction processing, record keeping, reconciliation, and custody of assets.
Condition: This is an inherent limitation for entities that are small in size and thus, have limited staff to perform designated functions.
Context/Cause: During our audit, we noted that duties were not segregated in a number of areas where small adjustments to the policies of the Organization could help to further facilitate this important control. These areas include cash disbursements, bank reconciliation, customer billing, cash receipts and collections, and approval of journal entries.
Effects: Lack of segregation of duties and a corresponding lack of monitoring and oversight increases exposure to misappropriation of assets and errors in financial reporting.
Recommendation; We recommend that management continue to evaluate the procedures and policies used in the accounting area and continue to segregate duties where possible. Additional oversight, monitoring, and approval will be necessary in areas where duties cannot be segregated at an optimal level due to limitations in staff size.
Auditee’s Response; Management has issued written policies and required training of all employees that handle financial transactions and has continually evaluated processes to find ways to segregate duties where possible. Management and the board of directors continue to oversee operations closely requiring approvals for all transactions.
Material Adjustments
Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles.
Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Organizations financial statements from being materially misstated.
Context/Cause: The Organization relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit.
Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports.
Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required.
Auditee’s Response: The Organization will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.
Non-Compliance - Reporting Criteria: 2 CFR section 200.329 Requires certain program performance reports to be filed on a timely basis.
Condition: Insufficient controls over performance reporting resulted in program performance reports not being timely filed by the Organization.
Context/Cause: The Organization receives federal funding through a passthrough agency, the Alabama Department of Mental Health. In accordance with the contract with the Alabama Department of Mental Health, certain performance reports are required to be filed on a quarterly basis by the 10th of the month following the quarter end.
Effects: Due to the resignation of the personnel responsible for filing the required reports, and management’s lack of control over the reporting process, the reports were not timely filed.
Recommendation: We recommend that management and the board oversee the reporting function so that issues arising with personnel do not prevent the timely filing of the reports.
Auditee’s Response: The Organization will cross train staff and create a schedule for the filing of reports on a timely basis and will monitor this more closely in future.
Segregation of Duties
Criteria: A basic internal control over financial reporting is the segregation of duties of transaction processing, record keeping, reconciliation, and custody of assets.
Condition: This is an inherent limitation for entities that are small in size and thus, have limited staff to perform designated functions.
Context/Cause: During our audit, we noted that duties were not segregated in a number of areas where small adjustments to the policies of the Organization could help to further facilitate this important control. These areas include cash disbursements, bank reconciliation, customer billing, cash receipts and collections, and approval of journal entries.
Effects: Lack of segregation of duties and a corresponding lack of monitoring and oversight increases exposure to misappropriation of assets and errors in financial reporting.
Recommendation; We recommend that management continue to evaluate the procedures and policies used in the accounting area and continue to segregate duties where possible. Additional oversight, monitoring, and approval will be necessary in areas where duties cannot be segregated at an optimal level due to limitations in staff size.
Auditee’s Response; Management has issued written policies and required training of all employees that handle financial transactions and has continually evaluated processes to find ways to segregate duties where possible. Management and the board of directors continue to oversee operations closely requiring approvals for all transactions.
Material Adjustments
Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles.
Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Organizations financial statements from being materially misstated.
Context/Cause: The Organization relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit.
Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports.
Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required.
Auditee’s Response: The Organization will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.
Non-Compliance - Reporting Criteria: 2 CFR section 200.329 Requires certain program performance reports to be filed on a timely basis.
Condition: Insufficient controls over performance reporting resulted in program performance reports not being timely filed by the Organization.
Context/Cause: The Organization receives federal funding through a passthrough agency, the Alabama Department of Mental Health. In accordance with the contract with the Alabama Department of Mental Health, certain performance reports are required to be filed on a quarterly basis by the 10th of the month following the quarter end.
Effects: Due to the resignation of the personnel responsible for filing the required reports, and management’s lack of control over the reporting process, the reports were not timely filed.
Recommendation: We recommend that management and the board oversee the reporting function so that issues arising with personnel do not prevent the timely filing of the reports.
Auditee’s Response: The Organization will cross train staff and create a schedule for the filing of reports on a timely basis and will monitor this more closely in future.
Segregation of Duties
Criteria: A basic internal control over financial reporting is the segregation of duties of transaction processing, record keeping, reconciliation, and custody of assets.
Condition: This is an inherent limitation for entities that are small in size and thus, have limited staff to perform designated functions.
Context/Cause: During our audit, we noted that duties were not segregated in a number of areas where small adjustments to the policies of the Organization could help to further facilitate this important control. These areas include cash disbursements, bank reconciliation, customer billing, cash receipts and collections, and approval of journal entries.
Effects: Lack of segregation of duties and a corresponding lack of monitoring and oversight increases exposure to misappropriation of assets and errors in financial reporting.
Recommendation; We recommend that management continue to evaluate the procedures and policies used in the accounting area and continue to segregate duties where possible. Additional oversight, monitoring, and approval will be necessary in areas where duties cannot be segregated at an optimal level due to limitations in staff size.
Auditee’s Response; Management has issued written policies and required training of all employees that handle financial transactions and has continually evaluated processes to find ways to segregate duties where possible. Management and the board of directors continue to oversee operations closely requiring approvals for all transactions.
Material Adjustments
Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles.
Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Organizations financial statements from being materially misstated.
Context/Cause: The Organization relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit.
Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports.
Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required.
Auditee’s Response: The Organization will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.
Non-Compliance - Reporting Criteria: 2 CFR section 200.329 Requires certain program performance reports to be filed on a timely basis.
Condition: Insufficient controls over performance reporting resulted in program performance reports not being timely filed by the Organization.
Context/Cause: The Organization receives federal funding through a passthrough agency, the Alabama Department of Mental Health. In accordance with the contract with the Alabama Department of Mental Health, certain performance reports are required to be filed on a quarterly basis by the 10th of the month following the quarter end.
Effects: Due to the resignation of the personnel responsible for filing the required reports, and management’s lack of control over the reporting process, the reports were not timely filed.
Recommendation: We recommend that management and the board oversee the reporting function so that issues arising with personnel do not prevent the timely filing of the reports.
Auditee’s Response: The Organization will cross train staff and create a schedule for the filing of reports on a timely basis and will monitor this more closely in future.
Segregation of Duties
Criteria: A basic internal control over financial reporting is the segregation of duties of transaction processing, record keeping, reconciliation, and custody of assets.
Condition: This is an inherent limitation for entities that are small in size and thus, have limited staff to perform designated functions.
Context/Cause: During our audit, we noted that duties were not segregated in a number of areas where small adjustments to the policies of the Organization could help to further facilitate this important control. These areas include cash disbursements, bank reconciliation, customer billing, cash receipts and collections, and approval of journal entries.
Effects: Lack of segregation of duties and a corresponding lack of monitoring and oversight increases exposure to misappropriation of assets and errors in financial reporting.
Recommendation; We recommend that management continue to evaluate the procedures and policies used in the accounting area and continue to segregate duties where possible. Additional oversight, monitoring, and approval will be necessary in areas where duties cannot be segregated at an optimal level due to limitations in staff size.
Auditee’s Response; Management has issued written policies and required training of all employees that handle financial transactions and has continually evaluated processes to find ways to segregate duties where possible. Management and the board of directors continue to oversee operations closely requiring approvals for all transactions.
Material Adjustments
Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles.
Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Organizations financial statements from being materially misstated.
Context/Cause: The Organization relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit.
Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports.
Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required.
Auditee’s Response: The Organization will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.
Non-Compliance - Reporting Criteria: 2 CFR section 200.329 Requires certain program performance reports to be filed on a timely basis.
Condition: Insufficient controls over performance reporting resulted in program performance reports not being timely filed by the Organization.
Context/Cause: The Organization receives federal funding through a passthrough agency, the Alabama Department of Mental Health. In accordance with the contract with the Alabama Department of Mental Health, certain performance reports are required to be filed on a quarterly basis by the 10th of the month following the quarter end.
Effects: Due to the resignation of the personnel responsible for filing the required reports, and management’s lack of control over the reporting process, the reports were not timely filed.
Recommendation: We recommend that management and the board oversee the reporting function so that issues arising with personnel do not prevent the timely filing of the reports.
Auditee’s Response: The Organization will cross train staff and create a schedule for the filing of reports on a timely basis and will monitor this more closely in future.
Segregation of Duties
Criteria: A basic internal control over financial reporting is the segregation of duties of transaction processing, record keeping, reconciliation, and custody of assets.
Condition: This is an inherent limitation for entities that are small in size and thus, have limited staff to perform designated functions.
Context/Cause: During our audit, we noted that duties were not segregated in a number of areas where small adjustments to the policies of the Organization could help to further facilitate this important control. These areas include cash disbursements, bank reconciliation, customer billing, cash receipts and collections, and approval of journal entries.
Effects: Lack of segregation of duties and a corresponding lack of monitoring and oversight increases exposure to misappropriation of assets and errors in financial reporting.
Recommendation; We recommend that management continue to evaluate the procedures and policies used in the accounting area and continue to segregate duties where possible. Additional oversight, monitoring, and approval will be necessary in areas where duties cannot be segregated at an optimal level due to limitations in staff size.
Auditee’s Response; Management has issued written policies and required training of all employees that handle financial transactions and has continually evaluated processes to find ways to segregate duties where possible. Management and the board of directors continue to oversee operations closely requiring approvals for all transactions.
Material Adjustments
Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles.
Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Organizations financial statements from being materially misstated.
Context/Cause: The Organization relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit.
Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports.
Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required.
Auditee’s Response: The Organization will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.
Non-Compliance - Reporting Criteria: 2 CFR section 200.329 Requires certain program performance reports to be filed on a timely basis.
Condition: Insufficient controls over performance reporting resulted in program performance reports not being timely filed by the Organization.
Context/Cause: The Organization receives federal funding through a passthrough agency, the Alabama Department of Mental Health. In accordance with the contract with the Alabama Department of Mental Health, certain performance reports are required to be filed on a quarterly basis by the 10th of the month following the quarter end.
Effects: Due to the resignation of the personnel responsible for filing the required reports, and management’s lack of control over the reporting process, the reports were not timely filed.
Recommendation: We recommend that management and the board oversee the reporting function so that issues arising with personnel do not prevent the timely filing of the reports.
Auditee’s Response: The Organization will cross train staff and create a schedule for the filing of reports on a timely basis and will monitor this more closely in future.
Segregation of Duties
Criteria: A basic internal control over financial reporting is the segregation of duties of transaction processing, record keeping, reconciliation, and custody of assets.
Condition: This is an inherent limitation for entities that are small in size and thus, have limited staff to perform designated functions.
Context/Cause: During our audit, we noted that duties were not segregated in a number of areas where small adjustments to the policies of the Organization could help to further facilitate this important control. These areas include cash disbursements, bank reconciliation, customer billing, cash receipts and collections, and approval of journal entries.
Effects: Lack of segregation of duties and a corresponding lack of monitoring and oversight increases exposure to misappropriation of assets and errors in financial reporting.
Recommendation; We recommend that management continue to evaluate the procedures and policies used in the accounting area and continue to segregate duties where possible. Additional oversight, monitoring, and approval will be necessary in areas where duties cannot be segregated at an optimal level due to limitations in staff size.
Auditee’s Response; Management has issued written policies and required training of all employees that handle financial transactions and has continually evaluated processes to find ways to segregate duties where possible. Management and the board of directors continue to oversee operations closely requiring approvals for all transactions.
Material Adjustments
Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles.
Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Organizations financial statements from being materially misstated.
Context/Cause: The Organization relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit.
Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports.
Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required.
Auditee’s Response: The Organization will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.
Non-Compliance - Reporting Criteria: 2 CFR section 200.329 Requires certain program performance reports to be filed on a timely basis.
Condition: Insufficient controls over performance reporting resulted in program performance reports not being timely filed by the Organization.
Context/Cause: The Organization receives federal funding through a passthrough agency, the Alabama Department of Mental Health. In accordance with the contract with the Alabama Department of Mental Health, certain performance reports are required to be filed on a quarterly basis by the 10th of the month following the quarter end.
Effects: Due to the resignation of the personnel responsible for filing the required reports, and management’s lack of control over the reporting process, the reports were not timely filed.
Recommendation: We recommend that management and the board oversee the reporting function so that issues arising with personnel do not prevent the timely filing of the reports.
Auditee’s Response: The Organization will cross train staff and create a schedule for the filing of reports on a timely basis and will monitor this more closely in future.