Audit 369724

Criteria: Sound financial reporting controls and COSO principles require timely, documented monthly bank reconciliations to ensure completeness and accuracy of cash and to detect errors or irregularities promptly. GAAP also presumes monitoring controls around cash balances and timely reconciliation to support accurate presentation in the financial statements. Condition/Context: For the year ended December 31, 2024, bank reconciliations for 11 of 12 months were not completed until mid-June 2025 (approximately six to fifteen months late). Cause: Staffing turnover and system/process changes during 2024, coupled with competing operational priorities, delayed routine month-end close activities. Effect/Possible Effect: Increased risk that cash balances and related activity could be misstated or that errors/irregularities could remain undetected for extended periods. Reduced usefulness of interim financial information for management and the board. Questioned Costs: Not applicable (financial statement control finding). Recommendation: Establish a written close calendar requiring completion and review of all bank reconciliations within 10 business days after month-end; implement a standardized reconciliation checklist with dated preparer/reviewer sign-offs; monitor timeliness monthly and report status to the finance committee until sustained compliance is achieved. Views of Responsible Officials: Management’s response and corrective action plan will be provided in the separate Corrective Action Plan.

Criteria: Management is responsible for ongoing evaluation of financial condition and liquidity and for performing the GAAP-required going-concern assessment. Effective internal control over financial reporting includes robust budget-to-actual monitoring, timely corrective actions to align spending with available resources, and formal documentation of liquidity assessments. Condition/Context: The Organization incurred continuing losses in fiscal year 2024, primarily due to lower-than-budgeted recoveries of the 15% administrative allowance on the All Children Thrive award and insufficient cost reductions to offset revenue shortfalls. At December 31, 2024 and continuing into 2025, the Organization financed operating shortfalls using a $300,000 line of credit and extended vendor terms. These conditions were significant factors in the auditor’s conclusion that substantial doubt exists regarding the Organization’s ability to continue as a going concern (absent management’s plans). Cause: Heavy reliance on cost-reimbursable funding where subrecipients underspent, limited unrestricted fundraising, and delayed budget adjustments to reduce the cost structure. Effect/Possible Effect: Heightened risk of financial statement misstatement if required going-concern disclosures, or related measurement considerations, are incomplete or not timely. Continued strain on liquidity could impair the Organization’s ability to meet obligations as they come due. Questioned Costs: Not applicable (financial statement control finding). Recommendation: Formalize a liquidity and financial condition monitoring plan with (1) board-approved triggers for timely cost containment, (2) monthly cash-flow forecasts tied to grant billing reality, (3) specific targets for unrestricted fundraising/diversification, and (4) documentation of the going-concern evaluation each reporting period, including assessment of the feasibility and timing of management’s plans. Views of Responsible Officials: Management’s response and corrective action plan will be provided in the separate Corrective Action Plan.