Finding 1147171 (2023-001)

Finding is for the following federal award Federal Assistance Listing Number Program Name Expenditures 93.917 Ryan White Part B HIV/AIDS Care Formula Program- Medi Cal AIDS Waiver Type of Compliance Requirement: Other Finding 2023-001: Internal Control Over Financial Reporting – Insufficient Review of Accounting Records - Significant Deficiency Criteria: Internal control over financial reporting requires that personnel with adequate skill, knowledge and experience in Nonprofit accounting and financial reporting oversee the maintenance of an entity's general ledger accounting system, subsidiary records, and external financial reporting processes. Condition: Community Care Management Corporation‘s internal controls were not operating as designed to detect material misstatements in accounting records, including estimates before submission of financial information for audit. Context: The accounting records are maintained using QuickBooks’ general ledger accounting system. Cash receipts and cash disbursements are entered into the QuickBooks’ general ledger system from source documents, and the bank accounts are reconciled monthly into the system cash balances. However, source documentation, specifically revenue detail, requested to review during fieldwork were not provided as required by generally accepted accounting principles for nonprofits using the accrual basis of accounting. Effect: The effect of the internal controls not operating as designed was that the organization’s normal closing and balancing of its accounts was not in accordance with generally accepted accounting practices. The impact was that some account balances were not accurate and reliable and hindered the timely preparation of both internal and external financial reports. Cause: The cause, the auditor’s judgment, was turnover of the financial management staff with adequate skill, knowledge and experience to maintain the organization’s general ledger accounting system, reconciling the account balances on a regular basis, and preparing its annual financial statements. Recommendation: We recommend Community Care Management Corporation reconcile all assets, liability, and net asset accounts to supporting schedules and documentation each month.