Finding Text
Proper Tracking of Endowment Activity. Condition and Criteria: During the audit, it was noted that the Endowment activity is not consistently tracked or recorded in the accounting system throughout the year. Current practice involves recording Endowment transactions only at year-end. According to U.S. GAAP, all significant financial activity should be recorded in the accounting records as it occurs to ensure accurate and complete financial reporting. Prior year audit finding: N/A Cause and Effect: Endowment activity is not monitored and recorded on an ongoing basis, which results in all transactions being captured only at year-end. This approach increases the risk of material misstatement in the consolidated financial statements, as errors, omissions, or irregularities may go undetected for an extended period. Delayed recording also reduces the effectiveness of internal controls, potentially allowing errors or fraudulent activity to persist before being identified and corrected. Recommendation: We recommend that management implement processes to track and record Endowment activity on a regular and timely basis throughout the year. This could include maintaining a running ledger of contributions, disbursements, investment income, and other activity, with periodic reconciliations to ensure completeness and accuracy. Regular tracking will strengthen internal controls, promote compliance with U.S. GAAP, and enhance the reliability of financial reporting. 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.B4 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.