Audit 406360

Type of Finding: Material Weakness in Internal Control over Financial Reporting Condition During the audit, we identified that the Agency’s year-end financial reporting controls did not detect and correct a material misstatement related to client assistance pass-through funding prior to the commencement of audit procedures. The misstatement related, in part, to the year-end confirmation and reconciliation process with State pass-through agencies. As a result, a material audit adjustment was required to properly state the financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). Criteria or Specific Requirement Management is responsible for maintaining internal controls over financial reporting sufficient to prevent, or detect and correct, material misstatements on a timely basis. Lack of such review controls over year-end financial reporting and confirmation processes led to material audit adjustments. Effect A material misstatement was not identified and corrected through the Agency’s internal controls prior to the audit. The material audit adjustment impacted federal expenditures reported on the Schedule of Expenditures of Federal Awards. Cause Year-end financial reporting review controls were not performed timely or did not operate effectively. During the fiscal year, the Agency experienced a transition in its outsourced accounting service provider, which impacted continuity and consistency in the execution of established financial reporting and reconciliation procedures, including year-end confirmation processes with State pass-through agencies. Repeat Finding No Recommendation We recommend that management ensures that all year-end financial reporting and confirmation processes are performed in a timely manner and ensures that all transactions are properly recorded prior to commencement of the annual audit. Views of Responsible Officials There is no disagreement with the audit finding. III. Federal Award Findings and Questioned Costs None.