Audit 414097

Federal Agency: Department of Health and Human Services Federal Program Name: Aging Cluster Assistance Listing Number: 93.044, 93.045 and, 93.053 Pass-Through Agency: State of Connecticut Department of Aging and Disability Services Award Period: 10/1/2024 to 9/30/2025 Type of Finding: • Material Weakness in Internal Control over Financial Reporting Condition: Turnover within the accounting department resulted in additional time required to reconcile activity for the year under audit. These conditions also contributed to errors in the recording and reporting of financial activity, which required a restatement of previously issued 2024 financial statements and corrections to amounts reported for Federal awards. Criteria or Specific Requirement: Internal controls over financial reporting are required to be designed to provide reasonable assurance that financial statement misstatements are prevented or detected and corrected. Our audit procedures revealed a continued need for improvement of a timely and complete monthly or periodic reconciliation and closing process. Lack of a complete monthly or periodic close led to a continuing and growing backlog of transactions and journal entries that were not posted into the accounting system, which rendered the accounting information inadequate. Effect: Material adjustments were required to be made by management prior to providing a trial balance for audit. Because financial information was not being fully tracked within the accounting system, management required a significant amount of time to reconcile and record activity. These conditions resulted in delayed issuance of the audit and contributed to errors in financial reporting that required the restatement of previously issued financial statements, increasing the risk that financial information, including amounts reported for Federal awards, may not be timely or accurate. Cause: Since 2022, the Finance Department has experienced turnover in the Finance Director position, with three different individuals serving in that role. The turnover, combined with changes in personnel and responsibilities within the finance function, resulted in a lack of continuity in the accounting and financial reporting processes. This contributed to delays in completing monthly or periodic reconciliations and closing procedures, as well as the accumulation of unrecorded transactions and journal entries. The lack of a consistent and timely close process limited management’s ability to identify and correct errors on a timely basis and contributed to the additional time required to reconcile and record financial activity for the year under audit. Repeat Finding: Yes, 2024-001 Recommendation: We recommend that the Organization fully utilize the accounting system as intended to track daily financial activity. We also recommend that they formalize monthly account reconciliations and year-end closing procedures to ensure that all transactions are properly recorded in the appropriate account and the correct period.

Federal Agency: Department of Health and Human Services Federal Program Name: Aging Cluster Assistance Listing Number: 93.044, 93.045 Award Period: 10/1/2022 9/30/2025 Federal Agency: Department of Health and Human Services Federal Program Name: Aging Cluster Assistance Listing Number: 93.044, 93.045 and 93.053 Pass-Through Agency: State of Connecticut Department of Aging and Disability Services Award Period: 10/1/2024 to 9/30/2025 Type of Finding: • Material Weakness in Internal Control over Compliance Condition: Turnover within the accounting department resulted in additional time required to reconcile activity for the year under audit. These conditions also contributed to errors in the recording and reporting of financial activity, which required the restatement of previously issued financial statements and corrections to amounts reported for Federal awards. Questioned costs: None Criteria or Specific Requirement: Internal controls over financial reporting are required to be designed to provide reasonable assurance that financial statement misstatements are prevented or detected and corrected. Our audit procedures revealed a continued need for improvement of a timely and complete monthly or periodic reconciliation and closing process. Lack of a complete monthly or periodic close led to a continuing and growing backlog of transactions and journal entries that were not posted into the accounting system, which rendered the accounting information inadequate and unable to complete the Federal Single Audit timely and accurate quarterly reporting. Effect: Material adjustments were required to be made by management prior to providing a trial balance for audit. Because financial information was not being fully tracked within the accounting system, management required a significant amount of time to reconcile and record activity. These conditions resulted in delayed issuance of the audit and contributed to errors in financial reporting that required the restatement of previously issued financial statements, increasing the risk that financial information, including amounts reported for Federal awards, may not be timely or accurate. Cause: Since 2022, the Finance Department has experienced turnover in the Finance Director position, with three different individuals serving in that role. The turnover, combined with changes in personnel and responsibilities within the finance function, resulted in a lack of continuity in the accounting and financial reporting processes. This contributed to delays in completing monthly or periodic reconciliations and closing procedures, as well as the accumulation of unrecorded transactions and journal entries. The lack of a consistent and timely close process limited management’s ability to identify and correct errors on a timely basis and contributed to the additional time required to reconcile and record financial activity for the year under audit. Repeat Finding: Yes, 2024-002 Recommendation: We recommend that the Organization fully utilize the accounting system as intended to track daily financial activity. We also recommend that they formalize monthly account reconciliations and year-end closing procedures to ensure that all transactions are properly recorded in the appropriate account and the correct period.

Federal Agency: Department of Health and Human Services Federal Program Name: Aging Cluster Assistance Listing Number: 93.044, 93.045 and 93.053 Pass-Through Agency: State of Connecticut Department of Aging and Disability Services Award Period: 10/1/2024 to 9/30/2025 Type of Finding: • Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: The Organization is required to submit quarterly expenditure reports to the funding agency. These reports were timely filed however the amount of expenditures was not accurate due to allocations of expenditures made at year-end. Condition: The Organization has an approved Cost Allocation Plan, however nonpayroll expenses were not allocated following the approved plan and were required to be allocated at year-end. Therefore, the total quarterly report expenditures does not agree with actual total expenses. Questioned costs: None Context: The fourth quarter expenditures reports were obtained and compared to actual reported expenses for each major program. Cause: Management was not aware of the allocation compliance. Effect: The effect is that expenses charged to the federal awards potentially could be in excess of actual allocated expense incurred. Repeat Finding: Yes, 2024-004 Recommendation: We recommend that the Organization fully utilize the accounting system as intended to track daily financial activity. We also recommend that they formalize monthly account reconciliations and year-end closing procedures to ensure that all transactions are properly recorded in the appropriate account and the correct period. Views of Responsible Officials: There is no disagreement with the audit finding.