Statement of Condition Grand Prairie Services and Affiliates was unable to provide timely year-end trial balances in accordance with U.S. GAAP and therefore did not submit its audited financial statements, SEFA, and other required information to the Federal Audit Clearinghouse by the required due dates. Criteria Grand Prairie Services and Affiliates is required to submit audited financial statements, a schedule of expenditures of federal awards (SEFA) and Uniform Guidance reports to the Federal Audit Clearinghouse. All items are required to be submitted to the Federal Audit Clearinghouse within nine (9) months after Grand Prairie Services and Affiliates’s fiscal year-end. 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 consolidated financial statements required for submission. 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, including performing an analysis of receivables under ASC 326 to measure allowance for credit losses in accordance with U.S. GAAP. Reconciling items should be investigated and resolved in a timely manner. All of the aforementioned items are essential to ensure that financial statements and data collection forms are submitted in conformance with 2 CFR Section 200.512(a)(1), certain tax returns, and certain grant agreements. Cause The Organization did not maintain an effective process to ensure timely preparation and submission of required Federal reporting. The primary cause of the delayed submission was the Organization’s inability to close its books timely at fiscal year-end. The absence of formal month-end and year-end close procedures, including insufficient account reconciliation schedules, undefined close deadlines, and a lack of monitoring controls, prevented the accounting department from producing accurate and complete financial data within the timeframes necessary to support a timely audit. The Organization also lacked formal procedures for evaluating the collectibility of aged accounts receivable in accordance with ASC 326 as part of the close process. Specifically, there were no defined criteria or controls requiring review of balances aged beyond 180 days or outstanding for multiple years, and no systematic process for incorporating historical collection experience or current conditions into the allowance estimate under U.S. GAAP. Without a reliable and repeatable close process, the audit could not commence or progress on schedule, creating delays throughout the entire financial reporting cycle. In addition to this, there were broader deficiencies in planning, coordination, and monitoring of the audit and financial reporting process, including a lack of defined timelines, insufficient tracking of deliverables, and inadequate controls to identify and address delays. Additionally, personnel turnover within the accounting department and limited process documentation contributed to the Organization’s inability to meet reporting deadlines. Effect Noncompliance with financial reporting deadlines could cause funding sources for Grand Prairie Services and Affiliates to suspend funding until compliance is achieved. Questioned Costs None noted. 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 Management should establish and implement formal procedures to ensure timely completion and submission of required Federal reporting. As a foundational step, management should develop and enforce a formal month-end and year-end close process that includes defined close deadlines, assigned responsibilities for each close task, a documented reconciliation checklist, and supervisory review controls to ensure the books are closed accurately and on schedule prior to the commencement of the annual audit. Without a reliable close process, downstream reporting timelines cannot be met. In addition to close procedures, management should implement a documented audit timeline aligned with Federal reporting deadlines, including defined roles and responsibilities and monitoring controls to track progress and escalate delays. Management should also enhance process documentation and cross-training to mitigate the impact of personnel changes and support continuity of the reporting process. Management should also establish formal policies and procedures for estimating the allowance for credit losses in accordance with ASC 326. Such procedures should include a defined aging review process that specifically addresses balances aged beyond 180 days and receivables outstanding for multiple years, a documented methodology for incorporating historical collection rates and current economic conditions into the estimate, and a supervisory review and approval control over the allowance calculation prior to financial statement issuance. These controls should be performed as a routine component of the year-end close process to ensure the allowance is complete, supportable, and consistently applied. View of Responsible Officials Management agrees with the finding. Management will establish procedures and monitor compliance with those procedures to ensure that the audited financial statements, schedule of expenditures of federal awards, and other required information is filed with the Federal Audit Clearinghouse by required due dates.
Material Weakness – Finding 2025-002: Schedule of Expenditures of Federal Awards Completeness Statement of Condition In connection with our audit, management initially represented that the schedule of expenditures of federal awards was complete and accurate. During the course of the audit, in response to auditor inquiry regarding another grant held by the Organization, management determined that the grant represented federal funds passed through the Housing Authority of Cook County, Illinois under State and Local Fiscal Recovery Funds, ALN 21.027, and that the related expenditures of $709,506 had not been included in the schedule of expenditures of federal awards as initially prepared. This indicates that the Organization's controls did not identify and accumulate all federal awards expended during the year, specifically federal awards received as pass-through funding from a local government unit. Criteria Title 2 U.S. Code of Federal Regulations Part 200 (Uniform Guidance) requires the auditee to prepare a schedule of expenditures of federal awards that includes the total federal awards expended for the period (2 CFR 200.508 and 200.510(b)). Federal awards expended include awards received indirectly from pass-through entities, including state and local governments such as counties. The non-Federal entity is also required to establish and maintain effective internal control over the federal award that provides reasonable assurance the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award (2 CFR 200.303). A complete and accurate schedule of expenditures of federal awards is necessary for the proper determination of major programs and the scope of the single audit. Cause The Organization's process for identifying federal awards did not include adequate procedures to detect federal funds passed through local government entities. The grant was initially treated as a non-federal award because its federal source was not apparent on its face, and the grant agreement and related funder documentation were not evaluated for indicators of federal funding (such as an Assistance Listing Number, a federal award identification number, the identity of the originating federal agency, or references to the Uniform Guidance). Effect A federal award was omitted from the schedule of expenditures of federal awards as initially prepared, resulting in an understatement of reported federal expenditures of $709,506. An incomplete schedule could result in incorrect determination of major programs and audit scope and in noncompliance with the reporting requirements of the Uniform Guidance. The schedule was subsequently revised to include the program. Questioned Costs None noted. Perspective The finding relates to the identification of a single federal pass-through award received from a local government unit. While isolated to that award, it reflects a deficiency in the design of the Organization's controls over the identification of federal awards. Statistical Sample A statistical sample is not applicable to this finding. Repeat Finding This audit finding is not a repeat finding. Recommendation We recommend that the Organization implement procedures to identify all federal awards expended, including funds passed through state and local governments. For each grant and contract, management should review the executed agreement and related funder documentation for indicators of federal funding, including an Assistance Listing Number, a federal award identification number, the originating federal agency, the pass-through entity identifying number, and references to the Uniform Guidance, and should confirm the federal funding status with the pass-through entity when it is not clear. The Organization should maintain a centralized listing of awards that is reconciled to the general ledger and reviewed for completeness in preparing the schedule of expenditures of federal awards. View of Responsible Officials Management agrees with the finding. Management will implement procedures to identify all federal awards expended, including pass-through awards received from state and local government units, and to evaluate grant agreements and funder documentation for indicators of federal funding, so that the schedule of expenditures of federal awards is complete and accurate.