Finding 1102035 (2023-006)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2025-03-04
Audit: 344694
Organization: Child Start, Inc. (MT)
Auditor: Jccs PC

AI Summary

  • Core Issue: Internal controls over capitalization are weak, leading to missed asset additions over $5,000.
  • Impacted Requirements: Failure to properly capitalize new assets or betterments has resulted in a $110,224 understatement of assets and net assets.
  • Recommended Follow-Up: Review repair and maintenance accounts at year-end for items over $5,000 and adjust as necessary.

Finding Text

Condition and Criteria: During the current year audit, we discovered deficiencies in internal controls over capitalization. Several items over the $5,000 capitalization threshold that were related to new assets or betterments rather than routine repair or maintenance were not capitalized. Cause: The Organization received guidance to expense flood related repairs. However, it appears purchases unrelated to flood damage were not tracked separately resulting in many fixed asset additions being missed. Effect: The effect of these deficiencies in internal controls was a $110,224 understatement in assets, a $110,224 overstatement of expenses, and a $110,224 understatement of net assets. Recommendation: We recommend the Organization review repair and maintenance accounts at year-end for items above the $5,000 capitalization threshold that are not routine maintenance and make appropriate adjustments as part of the year-end close process.

Categories

Procurement, Suspension & Debarment Internal Control / Segregation of Duties

Other Findings in this Audit

  • 525590 2023-002
    Material Weakness Repeat
  • 525591 2023-004
    Material Weakness Repeat
  • 525592 2023-005
    Material Weakness
  • 525593 2023-006
    Material Weakness
  • 525594 2023-001
    Material Weakness Repeat
  • 525595 2023-003
    Significant Deficiency Repeat
  • 1102032 2023-002
    Material Weakness Repeat
  • 1102033 2023-004
    Material Weakness Repeat
  • 1102034 2023-005
    Material Weakness
  • 1102036 2023-001
    Material Weakness Repeat
  • 1102037 2023-003
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
93.600 Head Start $3.63M
10.558 Child and Adult Care Food Program $107,249
93.575 Child Care and Development Block Grant $16,252