Finding Text
2024 – 001 Type of Finding: • Significant Deficiency in Internal Control over Financial Reporting Criteria or Specific Requirement: Generally accepted accounting principles (GAAP) requires the recording of expenditures in the period that they were incurred. Condition: There were two invoices for 2024 services that were not originally accrued for at year-end prior to the audit. Questioned costs: No questioned costs as the expenditures were allowable in accordance with the grant and within the grant period. Context: Both expenditures were for third party transit homeless outreach services that occurred in 2024 and were invoiced in 2025. The actual expenditures are allowable costs and within the grant period, however, the expenditures were not recorded in the Organization’s financial statements as required by GAAP. Cause: The two invoices were not received until January and March 2025 for the service period of October through December 2024. Management submits invoices when requesting grant reimbursements and therefore did not accrue the missing invoices until the annual audit. Effect: Prior to recording the audit adjustment, grant expenditures and the related accrual, and the corresponding grant revenue and receivable for 2024 were understated. However, the net impact to the changes in net assets for 2024 was not material. Repeat Finding: No Recommendation: Management should review invoices received subsequent to year-end and/or obtain estimates with vendors that typically bill in arrears in order to ensure that material expenditures (ad related grant revenue if applicable) are recorded in the financial statements as required by GAAP. Views of Responsible Officials: While Management does not agree with the finding, Management recorded the necessary audit adjustment.