Finding Text
Supervisory Review of Accounting Function Criteria: Accurate and timely records are required for GAAP and grant reporting. Condition: The Supervisory review of various accounting functions was lacking. We noted the following during the audit: • The trial balance we were given for the audit indicated a profit of $742,000. The nature of the organization makes it highly unlikely that a profit at this level could be achieved, which should have been investigated and resolved. (The final audited profit was $3,000.) • Cash accounts had inaccurate reconciling items requiring a $39,000 adjustment to cash. • The detail of accounts receivable did not agree to the general ledger by $253,000. • The detail of accounts payable includes two debit balances totaling $19,000 which appear incorrect. • The opening balance of opening equity did not agree to the previous years audited balance by $635,000. • The Profit and Loss by Job report profit did not agree to the general ledger by $5,668. Additionally, we noted that RTH Rental Subsidies were $4,106,618 per the Profit and Loss by Job report, but $4,099,230 per the general ledger. • There is a procedure to close the books monthly by a certain date, even if certain subcontractors have not submitted invoices for that time period. While this procedure may be fine for the interim period, at September 30, all subcontractor invoices must be recognized. We made an adjustment of $215,682 for August and September subcontractor invoices that had not been accrued. • There were no procedures to reconcile grant receivables and revenues. Our reconciliations resulted in adjustments (mostly immaterial) to all grant receivable and revenue accounts. • There was a mechanism to record unbilled grant receivables. At September 30, 2024, three of the four accounts used to record unbilled receivables had credit balances, which is not possible. Cause: There was no written procedures to require account reconciliations and the supervisory review of those reconciliations. Effect: In order for the financial statements to be fairly stated, the auditors made many adjustments, some of which were material. Recommendation: We recommend that management develop and implement procedure to perform and review all account reconciliations on a timely basis.