Finding Text
Condition: During the audit, it became apparent that there were insufficient procedures in place to ensure GAAP-compliant accounting and financial reporting.
Criteria: The Organization should have proper controls, personnel, and oversight in place to produce an effective control environment to ensure GAAP-compliant accounting and financial reporting.
Cause: The Organization did not have proper control related to recording, reviewing, and oversight of the financial accounting and reporting functions.
Effect: Numerous adjusting entries were identified during the audit in order to present GAAP-basis financial statements.
Recommendation: The Organization should re-evaluate its current procedures for its accounting and reporting functions and appropriately address any deficiencies.
Views of Responsible Officials and Planned Corrective Actions: Management was able to see deficiencies in the finance and accounting department in 2023. There was turnover of several staff, and in December 2023 the VP of Finance was removed from the position and a new qualified CFO was hired in mid-January 2024. An accounting and consulting firm, Cherry Bekaert was hired in early January 2024 to assist with bringing the accounting and financial systems up to GAAP standards.
In addition, the GL accountant position has been upgraded in 2024 to a Senior Accountant position and new qualified staff have been hired to continue to allow for internal controls. The AR and AP positions continue so that there is separation of duties as well.
Additionally, management decided in 2023, to move away from the accounting system ‘Traverse’ that was very difficult to navigate and was antiquated in its functioning. The new Sage Intacct accounting software was implemented in 2024. Cherry Bekaert was hired and under the direction of the new CFO the implementation was completed on May 1, 2024. SAGE Intacct has made the accounting process much more efficient to enable proper functioning of the accounting department.
Moving forward, the intention is to continue the assistance of the consulting firm, as a long-term consulting partner, to complete reconciliations and to ensure stability if there is staff turnover. This also ensures oversight and corrections of processes monthly.