Finding Text
Condition:
Management is not budgeting or accounting for the Workforce Investment and Opportunity Act (WIOA) grant activity in the District’s financial reporting system nor performing closing procedures to adequately integrate or agree grant reporting to the financial reporting system.
Criteria:
A central financial reporting system is an essential foundation of an internal control system over financial reporting and all financial activity should be accounted in such financial reporting system. As a compensatory control, regular and timely closing procedures can be utilized to adequately integrate any activity not initially accounted for, into the financial reporting system.
Context:
As a result of the independent audit, $1,554,350 in revenues and expenditures of WIOA grant activity were recorded without an adequate audit trail.
Cause:
WIOA grant activity is being accounted for in external worksheets that are not integrated or agreed to the District financial reporting system. As expenditures initially incurred and subsequently reimbursed by the WIOA grant are accounted in the District financial reporting system, there is a lack of sufficient audit trail for actual expenditures incurred by WIOA grant and rights and application of related reimbursements.
Effect:
Material misstatements of expenditures and rights to reimbursements may exist that management or employees, in the normal course of performing their assigned functions did not prevent, or detect and correct, on a timely basis.
Recommendation:
Management budget and account for the Workforce Investment and Opportunity Act (WIOA) grant activity in the District’s financial reporting system or perform regular and timely closing procedures to adequately integrate or agree grant reporting with the financial reporting system.
View of Responsible Official and Planned Corrective Action:
Management will budget and account for the WIOA grant activity in the District’s financial reporting system.