Audit 370632

Finding #2024-001 – Material Weakness – Accounting Recordkeeping (continued) All Programs Other Criteria Accounting tasks such as timely monthly analysis, reconciliations and review of accounts play a key role in providing the accuracy of accounting data and information included in the interim and year-end financial statements. Trial balances should be maintained for the Organization continuously, in accordance with U.S. GAAP. Detailed supporting schedules should be maintained for all significant asset, liability, revenue and expense accounts. Reconciling items should be investigated and resolved in a timely manner. All of the forementioned items are essential to ensure that financial statements and data collection forms are submitted in conformance with 2 CFR Section 200.512(a)(1). Condition During the year ended June 30, 2023, management was unable to provide timely year-end trial balances in accordance with U.S. GAAP without significant adjusting journal entries required to accurately reflect the underlying accounting transactions. The additional effort needed to reconcile fiscal year 2023 balances resulted in delays in reconciling fiscal year 2024 balances. Cause The Organization’s Accounting/Finance Department experienced significant turnover in personnel which resulted in a backlog of recording transactions and invoicing during the year ended June 30, 2024. Additionally, there was a change in Executive leadership during the fiscal year. This resulted in reconciliations not being performed timely. Effects Not performing timely and complete monthly and year-end account reconciliations and closing procedures leads to a continually and growing backlog of transactions and journal entries that are not posted to the accounting system, which renders the accounting information ineffective for making well-informed business decisions. This has led to the expenditure of significant time and effort by many to complete the required reconciliation procedures and prevented the timely delivery of financial statements to management, board members and funders. In addition, this led to the Organization to be noncompliant with required deadlines for Uniform Guidance and Data Collection Form submission. Questions Costs None. Perspective This audit finding is systematic. Statistical Sample A statistical sample is not applicable to this finding. Repeat Finding This audit finding is a repeat finding. Recommendation We recommend that individuals overseeing the accounting and finance department continue to review the Organization’s current accounting policies and update existing policies or implement new policies, as needed, to ensure that the trial balances are accurately maintained throughout the year, reconciliations are completed and reviewed monthly or quarterly, as appropriate, and the trial balances and related supporting schedules are prepared and reviewed timely after year-end. Views of Responsible Officials Management agrees with the finding. There was significant turnovers in the finance department, including the CFO and the finance director. These turnovers affected the ability of the Organization to produce the information on time for the auditors. The Organization is working with external consultants to improve the timeliness of reconciliations and audit preparation and recruiting vacant positions. We completed accounting policy changes which will correct the issues noted. Management is confident that the issues that have been noted have been rectified.