Finding Text
Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award.
Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis.
This internal control deficiency is considered to be a significant deficiency.
Context: Procedures included examining bank reconciliation reports for the December 2022 period. Bank reconciliations were reviewed for unusual transactions, large reconciling items, and a sample of transactions was traced to supporting documentation such as copies of cleared checks, bank statements, or other items.
Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year.
This continued throughout the 2022 fiscal year. Additionally, the reconciliation for the general checking account was changed/updated after receipt of the initial trial balance for the 2022 audit, indicating the bank reconciliations are still not being accurately or timely completed.
Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from prior fiscal years.
Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number was 2021-002.
Recommendation: The Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis.
View of Responsible Officials: There is no disagreement with this audit finding.