Finding Text
Finding number: 2024-001
Condition: During our audit, we noted that, due to turnover within the finance department, the Organization was not able to implement adequate internal controls over the consolidated financial statement closing and reporting process to allow for timely preparation and review of year-end reconciliations and schedules which resulted in numerous post-closing adjustments, delays in obtaining schedules and supporting documents and numerous revisions to schedule of federal expenditures.
Criteria: Management and those charged with governance are responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Cause: Turnover of key personnel during 2024, and general lack of implementation of U.S. GAAP, did not allow for consistent and effective implementation of existing internal controls over financial reporting.
Effect: Certain internal controls were not consistently, or effectively, implemented, and numerous post-closing adjustments were required to correct identified misstatements during the audit.
Recommendation: We recommend the Organization add personnel to the accounting/finance team and continue improving and training the accounting positions for the purpose of effective design and implementation of internal controls over financial reporting. Further, we recommend management evaluate the design of internal controls over the financial closing and reporting process to ensure adequate closing procedures, including implementation of a detailed monthly close checklist to include review of key account reconciliations, journal entries, and non-routine transactions at the appropriate level in a timely manner. We also recommend the Organization create a robust year-end reporting checklist that provides for proper recording of transactions in accordance with U.S. GAAP and includes cut-off procedures to ensure transactions are captured in the correct period. The implementation of these checklists will minimize the number of misstatements.
Views of Responsible Officials and Planned Corrective Actions: Management concurs and has provided a Corrective Action Plan which is included at the end of this report