Finding Text
Internal Controls Over Financial Reporting. Condition and Criteria: As a result of turnover in the accounting department and lack of consistency of accounting personnel, the Organization does not have sufficiently designed or consistently implemented internal controls to ensure accurate and complete financial reporting. Key controls, including timely reconciliations, review and approval of journal entries, and maintaining adequate documentation were not consistently performed throughout the year. Effective internal controls over financial reporting include documented policies, segregation of duties, timely reconciliations, and supervisory review to ensure accuracy and completeness. Prior year audit finding: N/A Cause and Effect: The lack of internal controls over financial reporting creates a reasonable possibility of material misstatement in the financial statements that may not be prevented or detected timely and have contributed to delays in year-end close and the audit process. Recommendation: The Organization has already taken an important step by engaging a contract accountant to assist with cleaning up the accounting records, reconciling financial information, and recording transactions in accordance with U.S. GAAP. As the Organization transitions these responsibilities to the new financial staff member, we recommend providing thorough training, clear expectations, and appropriate oversight to ensure continuity and consistency in accounting and financial reporting. Establishing structured guidance and ongoing monitoring will help strengthen internal controls and promote a smooth and sustainable transition in the finance function. Management’s Response: Healing Transitions acknowledges the findings noted in the Schedule of Findings and Questioned Costs. Management reviewed the matters identified and addressed them during the audit process in coordination with the auditors. Corrective actions included updating accounting treatments and disclosures related to capital assets, contributed property, and supporting schedules, as well as strengthening internal review procedures around complex or non-routine transactions. All necessary adjustments have been recorded, and management believes these actions adequately address the items noted. Management does not believe the issues identified resulted in material misstatements of the financial statements and will continue to refine internal processes to support accurate and timely financial reporting.