Condition and Context: ITCN filed the final amended report for grant no. 90CI010041-01 outside the required timeframe under the Head Start grant. ITCN also did not file Form SF-429(A), required by the Head Start program. Also, ITCN’s single audit reporting package for the fiscal year ended September 30, 2021, was not submitted to the Federal Audit Clearinghouse within nine months after ITCN’s year-end. Criteria: According to 2 CFR §200.327, Financial Reporting, information must be collected with the frequency required by the terms and conditions of the Federal award. The grants require the filing of quarterly reports within 30 days after the quarter-end. Cause and Effect: The cause is the lack of resources and turnover in personnel at ITCN. The effect is the late filing of the quarterly reports and the annual single audit reporting package, and, for Head Start, not reporting the real property status on the Form SF-429(A). Recommendation: We recommend that ITCN devote the necessary resources to the financial reporting process and establish a system of monitoring for the filing of all required reporting and that the executive director review the monitoring list on a regular basis consistent with the timing of report filings. Management’s Response: ITCN’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Condition and Context: ITCN filed the final amended report for grant no. 90CI010041-01 outside the required timeframe under the Head Start grant. ITCN also did not file Form SF-429(A), required by the Head Start program. Also, ITCN’s single audit reporting package for the fiscal year ended September 30, 2021, was not submitted to the Federal Audit Clearinghouse within nine months after ITCN’s year-end. Criteria: According to 2 CFR §200.327, Financial Reporting, information must be collected with the frequency required by the terms and conditions of the Federal award. The grants require the filing of quarterly reports within 30 days after the quarter-end. Cause and Effect: The cause is the lack of resources and turnover in personnel at ITCN. The effect is the late filing of the quarterly reports and the annual single audit reporting package, and, for Head Start, not reporting the real property status on the Form SF-429(A). Recommendation: We recommend that ITCN devote the necessary resources to the financial reporting process and establish a system of monitoring for the filing of all required reporting and that the executive director review the monitoring list on a regular basis consistent with the timing of report filings. Management’s Response: ITCN’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Condition and Context: ITCN filed the final amended report for grant no. 90CI010041-01 outside the required timeframe under the Head Start grant. ITCN also did not file Form SF-429(A), required by the Head Start program. Also, ITCN’s single audit reporting package for the fiscal year ended September 30, 2021, was not submitted to the Federal Audit Clearinghouse within nine months after ITCN’s year-end. Criteria: According to 2 CFR §200.327, Financial Reporting, information must be collected with the frequency required by the terms and conditions of the Federal award. The grants require the filing of quarterly reports within 30 days after the quarter-end. Cause and Effect: The cause is the lack of resources and turnover in personnel at ITCN. The effect is the late filing of the quarterly reports and the annual single audit reporting package, and, for Head Start, not reporting the real property status on the Form SF-429(A). Recommendation: We recommend that ITCN devote the necessary resources to the financial reporting process and establish a system of monitoring for the filing of all required reporting and that the executive director review the monitoring list on a regular basis consistent with the timing of report filings. Management’s Response: ITCN’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Condition and Context: ITCN filed the final amended report for grant no. 90CI010041-01 outside the required timeframe under the Head Start grant. ITCN also did not file Form SF-429(A), required by the Head Start program. Also, ITCN’s single audit reporting package for the fiscal year ended September 30, 2021, was not submitted to the Federal Audit Clearinghouse within nine months after ITCN’s year-end. Criteria: According to 2 CFR §200.327, Financial Reporting, information must be collected with the frequency required by the terms and conditions of the Federal award. The grants require the filing of quarterly reports within 30 days after the quarter-end. Cause and Effect: The cause is the lack of resources and turnover in personnel at ITCN. The effect is the late filing of the quarterly reports and the annual single audit reporting package, and, for Head Start, not reporting the real property status on the Form SF-429(A). Recommendation: We recommend that ITCN devote the necessary resources to the financial reporting process and establish a system of monitoring for the filing of all required reporting and that the executive director review the monitoring list on a regular basis consistent with the timing of report filings. Management’s Response: ITCN’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Condition and Context: ITCN filed the final amended report for grant no. 90CI010041-01 outside the required timeframe under the Head Start grant. ITCN also did not file Form SF-429(A), required by the Head Start program. Also, ITCN’s single audit reporting package for the fiscal year ended September 30, 2021, was not submitted to the Federal Audit Clearinghouse within nine months after ITCN’s year-end. Criteria: According to 2 CFR §200.327, Financial Reporting, information must be collected with the frequency required by the terms and conditions of the Federal award. The grants require the filing of quarterly reports within 30 days after the quarter-end. Cause and Effect: The cause is the lack of resources and turnover in personnel at ITCN. The effect is the late filing of the quarterly reports and the annual single audit reporting package, and, for Head Start, not reporting the real property status on the Form SF-429(A). Recommendation: We recommend that ITCN devote the necessary resources to the financial reporting process and establish a system of monitoring for the filing of all required reporting and that the executive director review the monitoring list on a regular basis consistent with the timing of report filings. Management’s Response: ITCN’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
Condition and Context: ITCN filed the final amended report for grant no. 90CI010041-01 outside the required timeframe under the Head Start grant. ITCN also did not file Form SF-429(A), required by the Head Start program. Also, ITCN’s single audit reporting package for the fiscal year ended September 30, 2021, was not submitted to the Federal Audit Clearinghouse within nine months after ITCN’s year-end. Criteria: According to 2 CFR §200.327, Financial Reporting, information must be collected with the frequency required by the terms and conditions of the Federal award. The grants require the filing of quarterly reports within 30 days after the quarter-end. Cause and Effect: The cause is the lack of resources and turnover in personnel at ITCN. The effect is the late filing of the quarterly reports and the annual single audit reporting package, and, for Head Start, not reporting the real property status on the Form SF-429(A). Recommendation: We recommend that ITCN devote the necessary resources to the financial reporting process and establish a system of monitoring for the filing of all required reporting and that the executive director review the monitoring list on a regular basis consistent with the timing of report filings. Management’s Response: ITCN’s responsible officials’ views and planned corrective action are in its corrective action plan at the end of the report.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
Criteria 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award, (b) The financial management system of each non- Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets, and (5) Comparison of expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto Rico Government Accounting Law, as amended, states that the accounting system of the instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide complete and clear information related to their financial results of operations. Condition The Department has a weakened financial reporting system, brought on by several deficiencies related to the accounting and financial reporting practices of the Department. The deficiencies noted as part of our procedures are summarized as follows: • The Department's procedure manuals contain outdated procedures which do not necessarily reflect the current tasks and operations of the Department. • The Department does not prepare monthly closings on a recurring and periodic basis. • The Single Audit Report has not been submitted in a timely manner and audit procedures are significantly delayed due to a lack of reconciliations and monthly closing procedures. • Multiple transactions are recognized retroactively several months after occurring, as a result of the significant delays brought forth by a weak financial reporting system. • The Department does not have adequate procedures to reconcile, in a timely manner, financial transactions recorded in the accounting system of the Puerto Rico Treasury Department with the accounting records maintained by the Department. Effect Deficiencies in the financial reporting and accounting practices of the Department may result in the following: • Financial Reports which are required as part of compliance with federal programs may be prepared with inaccurate or incomplete financial information and may not be submitted in a timely and compliant manner. • Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants, among other potential sanctions. • Inconsistency between the financial information registered in the Department with financial transactions recognized in the records of the Puerto Rico Treasury Department. • Difficulties in accurately assessing program performance and monitoring of expenses in line with budgeted amounts to actual amounts expended as part of program activities. Inefficiencies and additional effort incurred by employee's part as a result of outdated or inaccurate procedure manuals. This also results in confusion as to the proper procedures to follow and the relevant approval and revision tasks to be performed. • Non-compliance with federal program requirements brought forth as a result of financial information which is inaccurate. Cause The Department has not implemented a uniform internal accounting process that allows all the Department's administrations (5) to consolidate accounting information for both fiscal and program periods and reconcile with financial information with the Treasury Department. In addition, the Department lacks uniform internal accounting software and applications between the administrations of the Department, which precludes them from timely and accurate consolidation of financial information. Recommendation The Department needs to implement a formal monthly closing of its accounting records and financial reporting with the purpose of ensuring accurate and timely financial information. Monthly closing procedures would be carried out most efficiently by developing a logical order for closing procedures and assigning responsibility for completing the procedures to specific personnel. As the Department is composed of various administrations, a task force should be assigned to develop procedures which detail the data-gathering information process to accumulate financial data of the administrations in a consistent manner. In addition, financial information should be consolidated at the Department level in order to reconcile with the financial records of the Treasury Department. Procedures should include, at a minimum, the following: the month-end period, a list of monthly closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after month end, etc.) It is recommended that the closing and reconciliation procedures be documented in a checklist that indicates the responsible individual who will perform each procedure and when completion of each procedure is due. Following are recommendations regarding the required closing procedures and suggestions to improve the financial reporting system: • Determine that all transactions have been recorded and posted. Transactions should be reviewed for completeness by scanning accounts to determine any unusual balances or fluctuations from expectations. • Reconcile general ledger accounts to underlying records and compareireconcile this information with the records of the Puerto Rico Treasury Department. Any differences observed during this process should be followed up in a timely manner in order to clarify and clear any reconciling items between the two sets of financial records. • Accumulate pertinent information necessary for the preparation of federal reports (financial and performance reports). In addition, a proper flowchart of procedures and revisions should be prepared to ensure that federal reports are filed and certified within established deadlines. • Perform a budgetary analysis by comparing expected amounts of expenditure with actual results. This will provide a more accurate measure of performance for federal programs and the overall efficiency in the use of funds of the Department. This will enhance the monitoring of program performance to ensure compliance with federal regulations and State Plan objectives. • Proper storage and backup of Department data files as part of the closing procedure. All files should be properly backed up before monthly closing is determined to be complete. • Differences observed during the reconciliation and closing procedure need to be discussed with the management personnel responsible for providing oversight over each respective area of the financial reporting cycle. Any adjustments necessary as a result of these procedures should be posted in a timely manner and before the closing is completed. Internal control manuals should be evaluated to ensure that they provide a clear and descriptive flowchart which details personnel involved, flow of information, estimated time frames for deliverables, and other control procedures relevant to the Department's operations. The Department should also evaluate its existing manuals to determine if they are updated and accurately reflect the procedures the Department currently carries out and ensure that these are in compliance with federal requirements. Updated written procedures and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted efforts, enhancing the efficiency of the operations of the Department. Questioned Costs None Management's Response Refer to Grantee's Corrective Action Plan.
Criteria 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award, (b) The financial management system of each non- Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets, and (5) Comparison of expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto Rico Government Accounting Law, as amended, states that the accounting system of the instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide complete and clear information related to their financial results of operations. Condition The Department has a weakened financial reporting system, brought on by several deficiencies related to the accounting and financial reporting practices of the Department. The deficiencies noted as part of our procedures are summarized as follows: • The Department's procedure manuals contain outdated procedures which do not necessarily reflect the current tasks and operations of the Department. • The Department does not prepare monthly closings on a recurring and periodic basis. • The Single Audit Report has not been submitted in a timely manner and audit procedures are significantly delayed due to a lack of reconciliations and monthly closing procedures. • Multiple transactions are recognized retroactively several months after occurring, as a result of the significant delays brought forth by a weak financial reporting system. • The Department does not have adequate procedures to reconcile, in a timely manner, financial transactions recorded in the accounting system of the Puerto Rico Treasury Department with the accounting records maintained by the Department. Effect Deficiencies in the financial reporting and accounting practices of the Department may result in the following: • Financial Reports which are required as part of compliance with federal programs may be prepared with inaccurate or incomplete financial information and may not be submitted in a timely and compliant manner. • Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants, among other potential sanctions. • Inconsistency between the financial information registered in the Department with financial transactions recognized in the records of the Puerto Rico Treasury Department. • Difficulties in accurately assessing program performance and monitoring of expenses in line with budgeted amounts to actual amounts expended as part of program activities. Inefficiencies and additional effort incurred by employee's part as a result of outdated or inaccurate procedure manuals. This also results in confusion as to the proper procedures to follow and the relevant approval and revision tasks to be performed. • Non-compliance with federal program requirements brought forth as a result of financial information which is inaccurate. Cause The Department has not implemented a uniform internal accounting process that allows all the Department's administrations (5) to consolidate accounting information for both fiscal and program periods and reconcile with financial information with the Treasury Department. In addition, the Department lacks uniform internal accounting software and applications between the administrations of the Department, which precludes them from timely and accurate consolidation of financial information. Recommendation The Department needs to implement a formal monthly closing of its accounting records and financial reporting with the purpose of ensuring accurate and timely financial information. Monthly closing procedures would be carried out most efficiently by developing a logical order for closing procedures and assigning responsibility for completing the procedures to specific personnel. As the Department is composed of various administrations, a task force should be assigned to develop procedures which detail the data-gathering information process to accumulate financial data of the administrations in a consistent manner. In addition, financial information should be consolidated at the Department level in order to reconcile with the financial records of the Treasury Department. Procedures should include, at a minimum, the following: the month-end period, a list of monthly closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after month end, etc.) It is recommended that the closing and reconciliation procedures be documented in a checklist that indicates the responsible individual who will perform each procedure and when completion of each procedure is due. Following are recommendations regarding the required closing procedures and suggestions to improve the financial reporting system: • Determine that all transactions have been recorded and posted. Transactions should be reviewed for completeness by scanning accounts to determine any unusual balances or fluctuations from expectations. • Reconcile general ledger accounts to underlying records and compareireconcile this information with the records of the Puerto Rico Treasury Department. Any differences observed during this process should be followed up in a timely manner in order to clarify and clear any reconciling items between the two sets of financial records. • Accumulate pertinent information necessary for the preparation of federal reports (financial and performance reports). In addition, a proper flowchart of procedures and revisions should be prepared to ensure that federal reports are filed and certified within established deadlines. • Perform a budgetary analysis by comparing expected amounts of expenditure with actual results. This will provide a more accurate measure of performance for federal programs and the overall efficiency in the use of funds of the Department. This will enhance the monitoring of program performance to ensure compliance with federal regulations and State Plan objectives. • Proper storage and backup of Department data files as part of the closing procedure. All files should be properly backed up before monthly closing is determined to be complete. • Differences observed during the reconciliation and closing procedure need to be discussed with the management personnel responsible for providing oversight over each respective area of the financial reporting cycle. Any adjustments necessary as a result of these procedures should be posted in a timely manner and before the closing is completed. Internal control manuals should be evaluated to ensure that they provide a clear and descriptive flowchart which details personnel involved, flow of information, estimated time frames for deliverables, and other control procedures relevant to the Department's operations. The Department should also evaluate its existing manuals to determine if they are updated and accurately reflect the procedures the Department currently carries out and ensure that these are in compliance with federal requirements. Updated written procedures and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted efforts, enhancing the efficiency of the operations of the Department. Questioned Costs None Management's Response Refer to Grantee's Corrective Action Plan.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Authority. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to help to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. [2 CFR §200.302(b)(2)] Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close-out of the old system. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
Criteria 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award, (b) The financial management system of each non- Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets, and (5) Comparison of expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto Rico Government Accounting Law, as amended, states that the accounting system of the instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide complete and clear information related to their financial results of operations. Condition The Department has a weakened financial reporting system, brought on by several deficiencies related to the accounting and financial reporting practices of the Department. The deficiencies noted as part of our procedures are summarized as follows: • The Department's procedure manuals contain outdated procedures which do not necessarily reflect the current tasks and operations of the Department. • The Department does not prepare monthly closings on a recurring and periodic basis. • The Single Audit Report has not been submitted in a timely manner and audit procedures are significantly delayed due to a lack of reconciliations and monthly closing procedures. • Multiple transactions are recognized retroactively several months after occurring, as a result of the significant delays brought forth by a weak financial reporting system. • The Department does not have adequate procedures to reconcile, in a timely manner, financial transactions recorded in the accounting system of the Puerto Rico Treasury Department with the accounting records maintained by the Department. Effect Deficiencies in the financial reporting and accounting practices of the Department may result in the following: • Financial Reports which are required as part of compliance with federal programs may be prepared with inaccurate or incomplete financial information and may not be submitted in a timely and compliant manner. • Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants, among other potential sanctions. • Inconsistency between the financial information registered in the Department with financial transactions recognized in the records of the Puerto Rico Treasury Department. • Difficulties in accurately assessing program performance and monitoring of expenses in line with budgeted amounts to actual amounts expended as part of program activities. Inefficiencies and additional effort incurred by employee's part as a result of outdated or inaccurate procedure manuals. This also results in confusion as to the proper procedures to follow and the relevant approval and revision tasks to be performed. • Non-compliance with federal program requirements brought forth as a result of financial information which is inaccurate. Cause The Department has not implemented a uniform internal accounting process that allows all the Department's administrations (5) to consolidate accounting information for both fiscal and program periods and reconcile with financial information with the Treasury Department. In addition, the Department lacks uniform internal accounting software and applications between the administrations of the Department, which precludes them from timely and accurate consolidation of financial information. Recommendation The Department needs to implement a formal monthly closing of its accounting records and financial reporting with the purpose of ensuring accurate and timely financial information. Monthly closing procedures would be carried out most efficiently by developing a logical order for closing procedures and assigning responsibility for completing the procedures to specific personnel. As the Department is composed of various administrations, a task force should be assigned to develop procedures which detail the data-gathering information process to accumulate financial data of the administrations in a consistent manner. In addition, financial information should be consolidated at the Department level in order to reconcile with the financial records of the Treasury Department. Procedures should include, at a minimum, the following: the month-end period, a list of monthly closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after month end, etc.) It is recommended that the closing and reconciliation procedures be documented in a checklist that indicates the responsible individual who will perform each procedure and when completion of each procedure is due. Following are recommendations regarding the required closing procedures and suggestions to improve the financial reporting system: • Determine that all transactions have been recorded and posted. Transactions should be reviewed for completeness by scanning accounts to determine any unusual balances or fluctuations from expectations. • Reconcile general ledger accounts to underlying records and compareireconcile this information with the records of the Puerto Rico Treasury Department. Any differences observed during this process should be followed up in a timely manner in order to clarify and clear any reconciling items between the two sets of financial records. • Accumulate pertinent information necessary for the preparation of federal reports (financial and performance reports). In addition, a proper flowchart of procedures and revisions should be prepared to ensure that federal reports are filed and certified within established deadlines. • Perform a budgetary analysis by comparing expected amounts of expenditure with actual results. This will provide a more accurate measure of performance for federal programs and the overall efficiency in the use of funds of the Department. This will enhance the monitoring of program performance to ensure compliance with federal regulations and State Plan objectives. • Proper storage and backup of Department data files as part of the closing procedure. All files should be properly backed up before monthly closing is determined to be complete. • Differences observed during the reconciliation and closing procedure need to be discussed with the management personnel responsible for providing oversight over each respective area of the financial reporting cycle. Any adjustments necessary as a result of these procedures should be posted in a timely manner and before the closing is completed. Internal control manuals should be evaluated to ensure that they provide a clear and descriptive flowchart which details personnel involved, flow of information, estimated time frames for deliverables, and other control procedures relevant to the Department's operations. The Department should also evaluate its existing manuals to determine if they are updated and accurately reflect the procedures the Department currently carries out and ensure that these are in compliance with federal requirements. Updated written procedures and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted efforts, enhancing the efficiency of the operations of the Department. Questioned Costs None Management's Response Refer to Grantee's Corrective Action Plan.
Criteria 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award, (b) The financial management system of each non- Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§200.327 Financial reporting and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets, and (5) Comparison of expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto Rico Government Accounting Law, as amended, states that the accounting system of the instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide complete and clear information related to their financial results of operations. Condition The Department has a weakened financial reporting system, brought on by several deficiencies related to the accounting and financial reporting practices of the Department. The deficiencies noted as part of our procedures are summarized as follows: • The Department's procedure manuals contain outdated procedures which do not necessarily reflect the current tasks and operations of the Department. • The Department does not prepare monthly closings on a recurring and periodic basis. • The Single Audit Report has not been submitted in a timely manner and audit procedures are significantly delayed due to a lack of reconciliations and monthly closing procedures. • Multiple transactions are recognized retroactively several months after occurring, as a result of the significant delays brought forth by a weak financial reporting system. • The Department does not have adequate procedures to reconcile, in a timely manner, financial transactions recorded in the accounting system of the Puerto Rico Treasury Department with the accounting records maintained by the Department. Effect Deficiencies in the financial reporting and accounting practices of the Department may result in the following: • Financial Reports which are required as part of compliance with federal programs may be prepared with inaccurate or incomplete financial information and may not be submitted in a timely and compliant manner. • Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants, among other potential sanctions. • Inconsistency between the financial information registered in the Department with financial transactions recognized in the records of the Puerto Rico Treasury Department. • Difficulties in accurately assessing program performance and monitoring of expenses in line with budgeted amounts to actual amounts expended as part of program activities. Inefficiencies and additional effort incurred by employee's part as a result of outdated or inaccurate procedure manuals. This also results in confusion as to the proper procedures to follow and the relevant approval and revision tasks to be performed. • Non-compliance with federal program requirements brought forth as a result of financial information which is inaccurate. Cause The Department has not implemented a uniform internal accounting process that allows all the Department's administrations (5) to consolidate accounting information for both fiscal and program periods and reconcile with financial information with the Treasury Department. In addition, the Department lacks uniform internal accounting software and applications between the administrations of the Department, which precludes them from timely and accurate consolidation of financial information. Recommendation The Department needs to implement a formal monthly closing of its accounting records and financial reporting with the purpose of ensuring accurate and timely financial information. Monthly closing procedures would be carried out most efficiently by developing a logical order for closing procedures and assigning responsibility for completing the procedures to specific personnel. As the Department is composed of various administrations, a task force should be assigned to develop procedures which detail the data-gathering information process to accumulate financial data of the administrations in a consistent manner. In addition, financial information should be consolidated at the Department level in order to reconcile with the financial records of the Treasury Department. Procedures should include, at a minimum, the following: the month-end period, a list of monthly closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after month end, etc.) It is recommended that the closing and reconciliation procedures be documented in a checklist that indicates the responsible individual who will perform each procedure and when completion of each procedure is due. Following are recommendations regarding the required closing procedures and suggestions to improve the financial reporting system: • Determine that all transactions have been recorded and posted. Transactions should be reviewed for completeness by scanning accounts to determine any unusual balances or fluctuations from expectations. • Reconcile general ledger accounts to underlying records and compareireconcile this information with the records of the Puerto Rico Treasury Department. Any differences observed during this process should be followed up in a timely manner in order to clarify and clear any reconciling items between the two sets of financial records. • Accumulate pertinent information necessary for the preparation of federal reports (financial and performance reports). In addition, a proper flowchart of procedures and revisions should be prepared to ensure that federal reports are filed and certified within established deadlines. • Perform a budgetary analysis by comparing expected amounts of expenditure with actual results. This will provide a more accurate measure of performance for federal programs and the overall efficiency in the use of funds of the Department. This will enhance the monitoring of program performance to ensure compliance with federal regulations and State Plan objectives. • Proper storage and backup of Department data files as part of the closing procedure. All files should be properly backed up before monthly closing is determined to be complete. • Differences observed during the reconciliation and closing procedure need to be discussed with the management personnel responsible for providing oversight over each respective area of the financial reporting cycle. Any adjustments necessary as a result of these procedures should be posted in a timely manner and before the closing is completed. Internal control manuals should be evaluated to ensure that they provide a clear and descriptive flowchart which details personnel involved, flow of information, estimated time frames for deliverables, and other control procedures relevant to the Department's operations. The Department should also evaluate its existing manuals to determine if they are updated and accurately reflect the procedures the Department currently carries out and ensure that these are in compliance with federal requirements. Updated written procedures and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted efforts, enhancing the efficiency of the operations of the Department. Questioned Costs None Management's Response Refer to Grantee's Corrective Action Plan.
Condition: During our review of Federal Financial Reports (SF-425) for the Emergency Management Performance Grant (EMPG) covering program years 2018, 2019, and 2020, we noted multiple reporting deficiencies across all four reports reviewed, including late submissions (in some cases more than one year late), undated reports with no evidence of submission timeliness, incomplete financial data where federal cash receipts or disbursements were reported as zero despite active grant activity, inconsistent or missing expenditure information, incorrect or missing recipient share (matching funds), unreconciled balances between SF-425 reports and PRIFAS or the SEFA, lack of supporting documentation or reconciliation schedules, and no evidence of internal review or approval controls. Criteria: Under 2 CFR 200.327–200.329 and 2 CFR 200.302(b)(6), non-Federal entities must submit accurate, complete, timely performance and financial reports supported by accounting records; SF-425 reports must reflect financial results of each award, be supported by the accounting records, include federal and recipient share, and be submitted no later than 30 days after the end of the reporting period. Context: All four EMPG SF-425 reports reviewed exhibited at least one of the identified deficiencies, indicating systemic noncompliance with federal reporting requirements and insufficient monitoring over the reporting process. Cause: The Bureau lacks effective internal controls and supervisory review over the preparation, reconciliation, and submission of SF-425 reports, including inadequate coordination between accounting and grants management areas and no formal process to ensure reconciliation to PRIFAS accounting data prior to submission. Effect: The absence of timely, accurate, and reconciled financial reporting increases the risk of misstated federal program expenditures, may result in grantor sanctions such as withholding or suspension of federal funds, and impairs the Bureau’s ability to demonstrate compliance with Uniform Guidance reporting requirements. Recommendation: Establish and document formal procedures to ensure timely preparation, review, and submission of SF-425 reports; implement a reconciliation checklist requiring agreement of reported data to PRIFAS and SEFA records; ensure each report includes federal and recipient share, drawdown activity, and unliquidated obligations; designate an official responsible for review and approval prior to filing with retained evidence of submission; and provide staff training on federal reporting requirements under 2 CFR 200.327–200.329. Questioned Costs: None. Management Response: See corrective action plan.
2020-012 Financial Statement Reconciliations/Tie-In Procedures Material Weakness This is a repeat finding. The prior-year’s auditing finding number is 2019-007. Condition: A weakness existed in the overall reconciliation/tie-in procedures performed over the Housing Authority’s financial statement accounts for the fiscal year ended March 31, 2020. Financial accounts were not reconciled on a timely, monthly basis. The major areas where reconciliation procedures were weak included: A) Bank Reconciliations B) Grant Receivables C) Accounts Receivable and associated allowance for doubtful accounts D) Accounts Payable E) Payroll and Other Current Liabilities Criteria: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. Effect: In the course of performing the audit, the auditor recommended 9 adjusting journal entries be made to the financial statements for fiscal year ending March 31, 2020. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature. Recommendation: The Housing Authority should adopt written reconciliation and tie-in procedures into its financial policies and procedures manual. These policies should require timely reconciliations to take place as defined under policy.
2020-012 Financial Statement Reconciliations/Tie-In Procedures Material Weakness This is a repeat finding. The prior-year’s auditing finding number is 2019-007. Condition: A weakness existed in the overall reconciliation/tie-in procedures performed over the Housing Authority’s financial statement accounts for the fiscal year ended March 31, 2020. Financial accounts were not reconciled on a timely, monthly basis. The major areas where reconciliation procedures were weak included: A) Bank Reconciliations B) Grant Receivables C) Accounts Receivable and associated allowance for doubtful accounts D) Accounts Payable E) Payroll and Other Current Liabilities Criteria: OMB Uniform Guidance states the following in section 200.302, “(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause: Lack of written policies and procedures over financial tie-in procedures that identify who is responsible for performing these tie-in/reconciliation procedures. Effect: In the course of performing the audit, the auditor recommended 9 adjusting journal entries be made to the financial statements for fiscal year ending March 31, 2020. Many of these adjustments could have been avoided if timely reconciliation and tie-in procedures had been conducted by the finance department. Many of these audit adjustments were material in nature. Recommendation: The Housing Authority should adopt written reconciliation and tie-in procedures into its financial policies and procedures manual. These policies should require timely reconciliations to take place as defined under policy.