Finding 1138453 (2024-001)

Person to contact regarding findings: Dawn Melgares Section II – Financial Statement Findings 2024-001 Finding – Internal control over financial reporting Identification as a repeat finding This is a repeat finding of prior year audit finding number 2023-001. Criteria Management is responsible for the design, implementation, and maintenance of a system of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud, error, or other reasons. Statement of condition During our audit, we noted instances in which the entity’s system of internal control over financial reporting did not prevent or timely detect and correct a material misstatement to the entity’s financial statements. Additionally, not all transactions in the project’s books and records have been recorded in accordance with generally accepted accounting principles (GAAP) although members of management possess the necessary skills, knowledge and experience to perform this function. The project relies on its auditors to assist in the preparation and drafting of financial statements that include a complete presentation and proper footnote disclosures. This represents a material weakness in the project's internal controls over financial reporting. Cause Management does not have sufficient staff or an adequate process in place to reconcile the books and records on a timely basis in accordance with GAAP. Context Discovered during inquiries with management and review of the general ledger. The issue with the project’s system of internal control over financial reporting represents a material weakness in internal control. The internal control deficiency was not discovered as a result of the use of sampling procedures. Effect or potential effect The project’s financial statements were not free from material misstatements prior to adjustments proposed by the auditor. Questioned costs $0 Section II -- Financial Statement Findings (Continued) Views of responsible officials The project is in the process of training staff and implementing new procedures to ensure material misstatements are detected and corrected. It is not cost effective for the project to have a member of management spend additional time on preparing the working trial balance to account for all transactions in accordance with GAAP and to prepare the resulting financial statements. Recommendation Management should reconcile year-end balances with the annual audited trial balances obtained from the auditor after the release of the financial statements to ensure proposed audit adjustments have been recorded in the general ledger. Management should also complete monthly reconciliations of all accounts. Additionally, management should evaluate whether it would be cost effective for a member of management to spend additional time preparing the working trial balance to account for all transactions in accordance with GAAP and to prepare the resulting financial statements. Section III -- Federal Award Findings and Questioned Costs None.