Audit 396574

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS – significant deficiency. The books and records support the preparation of the Schedule of Expenditures of Federal Awards. A separate income statement is maintained for each cost reimbursement Federal award; however, contract expenditures require significant reconciliation in order to determine the expenditures required to be disclosed in the SEFA. None. Reconciliation of the respective income statements for each Federal award is required for SEFA disclosure. The income statements should include full GAAP accounting including prepaid expenses, accrued expenses, unbilled receivables, additional indirect costs, program income, and other differences. The reimbursable surplus should be nearly zero for each cost reimbursement contract. No differentiation between reimbursable and unreimbursable costs is made on each grant income statement. Once full GAAP accounting has been implemented during the year and there is a differentiation between reimbursable costs and unreimbursable costs on the individual grant reports, no significant reconciliation to the SEFA will be necessary. Expenditures of federal awards should agree to each contract income statement.

INTERNAL CONTROL OVER FINANCIAL REPORTING: REVENUE RECOGNITION – significant deficiency Promises to give, including those for donor restricted purposes, should be recorded in the fiscal year when unconditionally promised, rather than recorded in deferred revenue. During fiscal 2025, the Agency reporting monthly financial results on a modified cash basis, converting to GAAP basis at year end. The cutoff of revenue and receivables was not complete and certain promises to give had been recorded to equity or only partially recorded. None There were significant audit adjustments to revenue, net assets, and receivables GAAP revenue recognition policies and procedures (by revenue stream) have not yet been formally documented and requisite training held. Personnel who process and/or record billings and cash receipts should be trained and understand GAAP revenue recognition criteria, as well as controls over revenue cutoff to ensure completeness of revenues and support. Accounting policies and procedures should clarify that restricted promises to give (whether time restricted or purpose restricted) should be recorded when unconditionally promised. Conditional promises to give should be tracked and disclosed in the notes to the financial statements. The Corrective Action Plan has been developed by the Agency and included on page 30.