Finding 1098695 (2024-001)

Item # 2024-001 Valuation of Pledge Receivables (Significant Deficiency in Internal Control) Criteria: Under U.S. GAAP, long term pledge receivables are required to be discounted to net present value to ensure that they are properly stated under the accrual basis of accounting. Condition: During the year under audit, the Organization did not record the appropriate discount for long term pledge receivables. Cause: Management did not follow the requirements under U.S. GAAP for long term pledge receivables and did not take the necessary measures to ensure that the ending balance of long term pledge receivables was properly stated. Effect: Failure to update internal controls to comply with the requirements of U.S. GAAP could result in material misstatements of receivable balances. Recommendation: The Organization should strengthen its internal control practices by updating its policies and procedures to comply with U.S. GAAP. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout fiscal year 2025 to be in full compliance with U.S. GAAP and the Uniform Guidance. This exercise is anticipated to be complete by the end of fiscal year 2025.