Finding 1169036 (2024-002)

SIGNIFICANT DEFICIENCY 2024-002 PREPARATION OF ANNUAL FINANCIAL STATEMENTS Condition: The audited financial statements and the accompanying footnote disclosures were prepared by the auditors. Criteria: It is the responsibility of management to prepare the financials and related disclosures to be audited. This criteria is derived from the audit engagement letter and demonstrates the general proficiency over financial reporting. Cause: Employees at Hanan Refugees Relief Group do not have experience preparing financial statements and disclosures in accordance with generally accepted accounting principles in the United States. Effect: Without staff knowledgeable about the preparation of financial statements in accordance with generally acceptable accounting principles, there may be material misstatements in the financials or disclosures that would not be prevented or detected in a timely manner. Recommendation: It is not cost effective for the auditee to employ additional personnel solely for financial reporting purposes. Therefore, the Organization should continue to utilize the financial expertise of their contracted CPA firm that performs accounting services. Management Response: The Organization will continue to use a CPA accounting service.