Finding 2024-001 – Material Weakness – Accounting Recordkeeping All programs Other Criteria The Corporation is responsible for effective internal controls over financial reporting for all accounts included in the financial statements. Accounting tasks, such as timely monthly analysis, reconciliations and review of accounts play key roles in providing the accuracy of accounting data and information included in interim and year-end financial statements. Trial balances should be maintained for the Corporation continuously in accordance with U.S. GAAP. Detailed supporting schedules should be maintained for all significant asset, liability, revenue, and expense accounts. Reconciling items should be investigated and resolved in a timely manner. All of the forementioned items are essential to ensure that financial statements and data collection forms are submitted in conformance with 2 CFR Section 200.512(a)(1). Condition During the audit of the fiscal year ending June 30, 2024, the Corporation's management was unable to provide timely year-end trial balances in accordance with U.S. GAAP. An accurate year-end trial balance was not provided in a timely manner, and management continued to make a significant number of adjustments after the year-end trial balance had been provided to the auditors, resulting in significant time by management and the auditors to complete the audit. In addition, during the audit it was discovered that certain account balances and transactions were not properly recorded in the prior year, resulting in a prior period adjustment to correct the beginning balances as of July 1, 2023. While reconciling accounts payable and accrued expenses as of June 30, 2024, management discovered that the accounts payable balance was incorrect dating back to 2023. The Corporation changed accounting software packages during the year ended June 30, 2023 and during the transition of accounting packages, an accounts payable balance totaling $390,229 transferred into the new software. The invoices representing this balance were also entered into the accounts payable module and transferred into the general ledger module, resulting in a double recording of the accounts payable balance and overstatement of expenses by $390,229 in fiscal year 2023. During our testing of grant revenue for the year ended June 30, 2024, we noted that unconditional grant revenue from two separate grants totaling $475,000 was improperly recorded in June 30, 2024 when the cash was received, rather than during the year ended June 30, 2023 when the unconditional grants were received, resulting in an understatement of both grant revenue and grants receivable totaling $475,000 in fiscal year 2023. Cause The primary reason for the above issues is due to the Corporation experiencing turnover at the Chief Financial Officer ("CFO") position and other key positions in the Finance Department. Effects Not performing timely and complete monthly and year-end account reconciliations and closing procedures leads to a continually and growing backlog of transactions and journal entries that are not posted to the accounting system, which renders the accounting information ineffective for making well-informed business decisions. This has led to the expenditure of significant time and effort by many to complete the required reconciliation procedures and prevented the timely delivery of financial statements to management, board members and funders. In addition, this led to the Corporation to be noncompliant with required deadlines for Uniform Guidance and Data Collection Form submission. Accounts payable and accrued expenses and expenses were overstated by $390,229 as of and for the year ended June 30, 2023, and grant revenue and grants receivable were understated by $475,000 as of and for the year ended June 30, 2023, resulting in the Corporation's net assets being understated by a total of $865,229 as of June 30, 2023. The Corporation's net assets as of July 1, 2023 have been restated to correct this error. Questioned Costs None Perspective This audit finding is systemic. Statistical Sample A statistical sample is not applicable to this finding. Repeat Finding This audit finding is a repeat finding of Finding 2023-001. Recommendation We recommend that management continue to review and update the Corporation's policies and procedures to ensure that the trial balance is accurate throughout the year. Account reconciliations and supporting schedules should be prepared and reviewed on a monthly basis. The accounting books and records should be closed timely at year end and thoroughly reviewed. Views of Responsible Officials The Corporation acknowledges the material weakness identified in our fiscal year 2024 audited financial report and appreciates the auditor's guidance. We are fully committed to strengthening financial controls, improving reporting accuracy, and enhancing departmental oversight. Following the departure of our Director of Finance in June 2021, and the appointment of a new CFO in December 2021, the Corporation faced challenges implementing consistent procedures for tracking expenditures, processing payments, and producing timely financial reports. These issues were exacerbated by a poorly executed transition to a new accounting system, selected based on the CFO's prior experience, which resulted in incomplete transaction data later identified through audits. In October 2023, the Corporation engaged an external accounting firm to conduct a comprehensive assessment. That same month, the CFO separated from the Corporation. The firm was retained to support retroactive financial analysis and provide interim financial management. Concurrently, the Corporation explored a partnership with a larger organization offering integrated back-office services. However, the proposed arrangement required full control over the Corporation's governance and assets. Leadership determined this was not in the Corporation's best interest and ended discussions in December 2024. A search for a permanent CFO was initiated. In February 2025, a new CFO was hired and immediately launched a full evaluation of the Accounting and Finance department. Her efforts have included restructuring staff, restarting the fiscal year 2024 audit, implementing new financial policies, and launching a credit card purchasing system with embedded controls. Within six months, she has established new internal controls, enhanced financial reporting, and introduced staff training protocols. To remediate the material weakness, the Corporation has implemented the following initiatives: Month-End Close Process: July 2025 marked the first successful month-end close, anticipated to be completed on August 22, 2025. This included key reconciliations, journal entries, and revenueexpense reporting. Department Structure and Documentation: We are refining processes and documentation using technology and talent to promote transparency and accountability. Leveraging Technology: o Ramp: Enables real-time spend controls, customizable virtual cards, and automated receipt matching. It enforces policy compliance, prevents unauthorized purchases, and supports audit readiness. o NetSuite ERP: Streamlines operations and decision-making through automated, real-time reporting, ensuring consistent and accurate insights across departments. We affirm our alignment with the auditor's recommendations to ensure trial balance accuracy, monthly account reconciliations, and timely year-end closings. These practices are now embedded in our financial operations and supported by enhanced review protocols. The Corporation is confident that these corrective actions will fully address the material weakness and position the Corporation for sustained financial health, transparency, and compliance.