Finding Text
Finding 2024 - 02: Reporting Corrections Federal Program and Specific Award Identification: All federal programs and state award. Federal Program and Specific Award Identification: All federal programs and state award. Criteria: The Schedule of Expenditures of Federal Awards and State Financial Assistance should reconcile to the financial statements. Condition: During this fiscal year, the audit team proposed adjustments to reconcile the Schedule of Expenditures of Federal Awards and State Financial Assistance to the financial statements. Cause: Timely review and reconciliations were not always performed. Effect or Potential Effect: The Schedule of Expenditures of Federal Awards and State Financial Assistance did not reconcile to the financials which has the potential risk of changing the scope of major programs tested. Questioned Costs: There were no such items identified during our audit. Perspective: This impacts the financial reporting and tracking of all federal awards and state programs. Repeat Finding: This is not a repeat finding. Type of Finding: Internal Control Over Financial Reporting and Internal Control Over Major Federal Programs and State Awards (All Programs and Awards). Recommendation: We recommend that management implement controls to perform timely review and approval of reconciling The Schedule of Expenditures of Federal Awards and State Financial Assistance to the financial statements. Views of responsible officials: Management concurs with the finding. RCMA experienced turnover in key finance personnel during FY24, which contributed to delays and gaps in performing timely account reconciliations and supervisory reviews. These challenges, combined with resource constraints, resulted in adjustments to the Schedule of Expenditures of Federal Awards and State Financial Assistance. Corrective Action Plan: To address the noted condition, management has implemented corrective measures effective with the FY25 reporting cycle: 1. New ERP System Implementation – The transition to the new ERP system will automate the tracking of federal and state grant expenditures against the general ledger and streamline the preparation of the Schedule of Expenditures of Federal Awards (SEFA) and State Financial Assistance. 2. Strengthened Internal Controls and Approvals – Beginning in FY25, updated policies and procedures require monthly reconciliations of the SEFA schedule to the general ledger. These reconciliations are reviewed and approved by senior finance staff to ensure timely identification and correction of discrepancies. 3. Independent Oversight and Expertise – The organization has engaged an independent consulting firm with deep nonprofit expertise to assist in reviewing internal controls and reconciliation processes, ensuring alignment with best practices, and providing periodic oversight during the ERP transition. 4. Ongoing Staff Training – Finance staff are receiving training in the new ERP system and updated internal control procedures to ensure consistency and accuracy across reporting periods. Management believes these measures, beginning with FY25 reporting, will ensure timely, accurate reconciliations of the SEFA schedule to the financial statements, prevent future audit delays, and strengthen overall grant compliance. Questioned Costs None reported.