Audit 412878

Criteria: Accounting principles generally accepted in the United States of America and applicable to not-for-profit entities require that amounts be recognized as revenues once barriers have been overcome that grantors or donors have applied to the conditional receipt of funds. Additionally, standards require that advanced payments of funds received, but which have barriers to unconditional receipt or a right of return to the grantor or donor if restrictions to their use aren’t met, be recognized as deferred revenue on the statements of financial position. Condition: The Association’s controls were not effective to ensure it was recognizing revenue and unearned revenue for reimbursement-based programming in the same period the expenditure occurred. This internal control deficiency is considered to be a significant deficiency. Context: Procedures included examining general ledger detail and grant agreements related to advanced funding received, but not yet expended, in determining whether or not a liability for unearned revenue existed. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording deferred revenue in the correct period, revenues from reimbursement-based awards could be materially misstated. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number was 2024- 002. Recommendation: The Association establish controls to ensure that funds received from advance awards are recognized as revenue when earned. View of responsible officials: There is no disagreement with this audit finding.

Criteria: The Association’s payroll liability accounts did not agree with the actual liabilities owed at year end and material adjustments were made as part of the audit process. Condition: The Association’s controls were not effective to ensure transactions recorded to payroll liability accounts were appropriate and balances were accurately stated at year end on the trial balance. This internal control deficiency is considered to be a significant deficiency. Context: Our procedures included examining payroll tax filings, payroll registers, and general ledger detail reports and comparing supporting documentation to account balances as of December 31, 2025. Cause: The payroll software is not configured in a way that allows for proper mapping of payroll liability accruals to correct accounts. Additionally, no reconciliation is being performed on a regular basis to ensure liabilities are properly stated. Effect: By not reconciling payroll liabilities on a regular basis, the Association is not able to identify material misstatements in liability balances and expense accounts in a timely manner. Recommendation: We recommend the Association adopt controls to reconcile payroll liability balances at least quarterly. View of Responsible Officials: There is no disagreement with this audit finding.