Finding 1075676 (2023-002)

Item # 2023-002 Net Assets with Donor Restrictions (Material Weakness in Internal Control) Criteria: Under GAAP, net assets with donor restrictions should be released from restrictions when the award terms of the related grants or contributions are met. Condition: Management did not release all restricted net assets within the proper period. Cause: Management did not examine grant and contribution agreements carefully enough to determine the nature of the applicable terms for restrictions and did not take necessary measures to ensure that net assets with donor restrictions were properly released throughout the fiscal year. Effect: Net assets with donor restrictions were overstated by $3,571,287 and net assets without donor restrictions was understated by $3,571,287. Recommendation: We recommend that management ensures that it examines grant agreements carefully to determine the nature of the applicable terms for restrictions, and to take necessary measures to ensure that net assets with donor restrictions were properly released throughout the fiscal year. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout 2024 to be in full compliance with GAAP. This exercise is anticipated to be complete by the end of the fiscal year.