Finding 2024-01 Financial Close Process Condition: During the audit, it was noted that the Organization lacked a robust financial close and review process. This deficiency resulted in material audit adjustments across key financial statement accounts, including revenue, accounts payable, accrued expenses, deferred revenue, nets assets, and related activity accounts. These adjustments were proposed by the auditors and subsequently recorded by management in order to fairly present the financial statements in accordance with generally accepted accounting principles. The extent and materiality of the adjustments indicate that the Organization's existing closing procedures were insufficient to identify and correct errors prior to the audit. Corrective Actions Taken or Planned: The Organization acknowledges this finding and agrees with the auditor’s assessment regarding the need for a more robust financial close and review process. We recognize that the absence of such a process contributed to the material audit adjustments noted during the engagement. Management and the Board are committed to strengthening internal controls and financial oversight to ensure that future financial statements are materially accurate and compliant with GAAP prior to audit. We are confident that the measures underway will address the deficiency and prevent recurrence. To address this finding, the Organization will implement a comprehensive monthly and quarterly financial close and review process to ensure accuracy, timeliness, and compliance with GAAP prior to the annual audit. Specific actions include: 1. Monthly Close Procedures - Develop and document a formal month-end closing checklist. - Reconcile all key accounts monthly (cash, accounts payable, receivables, accrued expenses, deferred revenue, and net assets). - Require dual review and sign-off from the Accountant (FTM) and Co-Executive Director. 2. Quarterly Financial Review - Conduct quarterly reviews of financial statements and reconciliations with the Treasurer of the Board. - Compare actual results against budget and prior-year trends to identify anomalies early. - Engage an external accountant (FTM) quarterly (if feasible) for review and guidance. 3. Training & Capacity Building - Provide finance staff with training in GAAP reporting and nonprofit accounting best practices. - Implement cross-training to ensure continuity if staffing changes occur. 4. Documentation & Controls - Maintain detailed documentation of all reconciliations and adjusting entries. - Establish a clear approval hierarchy for journal entries, ensuring all significant entries are reviewed by leadership prior to posting. 5. Audit Readiness - By implementing these processes, management will be positioned to present materially accurate financial statements prior to auditor review. - The goal is to minimize, if not eliminate, material audit adjustments in future years. Progress will be tracked by requiring the Finance Committee to review and approve quarterly financial packages. Any discrepancies or deficiencies will be documented and corrective steps taken promptly.