Finding Text
Reference Number: 2024-001 Internal control material weakness Program: 21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS Criteria: Proper recording of transactions in accordance with GAAP as agreements are signed and/or when funds are received. Condition: The agreements to receive these grants and loan them out to a specific development project were signed in July and October 2024 for $648,718 and $525,000, respectively. The funds for the July agreement of $648,718 were received by the entity and paid back out to the development project. The $648,718 was recorded to the general ledger twice. It was recorded once when the funds were received and paid out to the development project and a second time when the Organization was closings its books for the fiscal year. When the funds were paid out to the development, the funds were also incorrectly recorded as an expense instead of a loan receivable. Questioned Costs: $648,718 Effect: Expenses and revenue were overstated by $648,718. Recommendation: The Organization should employ financial literate staff who are familiar with GAAP accounting to ensure financial transactions are recorded in accordance with current accounting standards. Also, the Organization should implement a process for a final detailed review of financial data when performing post-closing audit adjustments to ensure proper and complete capture of all transactions. Management’s Response: Management understands the audit findings and the associated risks and will take the appropriate action to hire either staff or vendors with appropriate financial statement review skills and knowledge of GAAP. The Organization will implement a process for a final detailed financial statement review before providing final yearend financial statements to the auditors.