Finding 1062526 (2022-001)

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.