Finding Text
Criteria: The Organization appears to have an insufficient level of staffing available to operate the accounting function of the Organization, especially related to revenue streams and funding sources.
Condition and Context: Throughout the performance of audit procedures, the auditor identified several revenue streams and funding sources that were mis-identified as to type of transaction (exchange vs. nonexchange), affecting revenue, deferred revenue, accounts receivable and refundable advances.
Cause: The Organization has limited resources to identify types of revenue streams and funding sources and the appropriate accounting principle applications. While the Organization’s senior management, including the Chief Financial Officer, appear to be well qualified, the demands of the various assigned duties and responsibilities appear to be at a level that does not allow all necessary tasks to be performed.
Effect: Revenue was not recognized appropriately based on the type of revenue streams and funding sources received throughout the year. The lack of appropriate recognition may result in the occurrence of unauthorized or inaccurate activity recorded within the Organization’s records and reflected on the interim financial statements.
Recommendation: The Organization should increase staffing to accurately account for the various revenue streams and funding sources. Revenue streams and funding sources should be analyzed for type of transaction (exchange vs. nonexchange; federal vs. non-federal). Appropriate accounting principles should be applied based on the revenue stream and funding
source transaction type.
Management Response: Revenue streams and funding sources will be analyzed, identifying type of transaction to determine the appropriate recording of revenue, see attached corrective action plan.