Finding Number: 2025-001 Type of Finding: Material Weakness over Financial Reporting Repeat Finding: No Federal Award Impact: None Criteria Management is responsible for establishing and maintaining effective internal control over financial reporting, including controls designed to provide reasonable assurance that financial transactions are recorded in the proper period, account balances are accurate and complete, financial statements and disclosures are prepared in accordance with accounting principles generally accepted in the United States of America, and material misstatements are prevented or detected and corrected on a timely basis. Condition The Organization did not maintain effective controls over the timely preparation and review of financial statements and related disclosures. During the audit, errors in the Organization’s previously issued December 31, 2024 financial statements were identified related to receivables, construction in progress, accumulated depreciation, accrued liabilities, net-asset classification and revenue. These errors resulted in a restatement of the previously issued financial statements. Cause Management’s period-end close and financial-reporting review procedures were not sufficiently designed or operating effectively to identify and correct material errors in significant account balances and related financial-statement disclosures before the financial statements were issued. Specifically, controls over the reconciliation and review of construction in progress, accumulated depreciation, accrued liabilities, accounts receivable, revenue recognition and cutoff, and net-asset classifications were not performed with sufficient precision or were not timely documented and reviewed. Effect or potential effect The Organization’s previously issued December 31, 2024 financial statements were restated. The restatement affected receivables, construction in progress, accumulated depreciation, accrued liabilities, net assets with and without donor restrictions and revenue. As a result, there is a reasonable possibility that material misstatements in the Organization’s financial statements could occur and not be prevented, or detected and corrected, on a timely basis. Recommendation We recommend that management establish, implement, and document a formal monthly and year-end financial-close process. The process should include: • Timely preparation and independent review of reconciliations for significant statement of financial position and statement of activities accounts. • Review and reconciliation of CIP, depreciation calculations, construction-related invoices, and retainage. • Formal review of accounts receivable aging and pledges receivable, customer balances, revenue recognition, revenue cutoff, collectability, and subsequent cash receipts. • Documented review of donor restrictions, releases from restriction, and net-asset classifications. • A final review of proposed adjusting journal entries, the financial statements, and all disclosures by an individual with appropriate technical accounting knowledge before issuance. • Retained evidence of preparation, review, resolution of review comments, and approval. Views of responsible officials and planned corrective action Management agrees with the finding. Management will enhance its month-end and year-end close procedures by implementing documented reconciliations and supervisory review controls over significant accounts, including accounts receivable and revenue, capital assets and construction in progress, accrued liabilities, and net-asset classifications.