Finding Text
Finding Number: 2024-002 Repeat Finding: No Type of Finding: Material Weakness in Internal Control over Financial Reporting Description: Grant Budget Management Condition: Kankakee County Community Services, Inc. did not effectively manage grant budgets during the fiscal year ended December 31, 2024. Specifically, management lacked adequate internal controls to monitor grant expenditures against approved budgets. As a result, the Organization overspent on multiple grants, incurring expenditures in excess of allowable or budgeted amounts. This contributed to an overall net loss for the year and required management to fund unallowable or excess costs using unrestricted resources. In addition, cash on hand as of December 31, 2024 was less than advances received from its funding sources, indicating advances were used to finance other expenses. Criteria: Kankakee County Community Services, Inc. is responsible for establishing and maintaining effective internal controls over financial reporting to ensure that transactions are properly authorized, recorded, and reported in accordance with generally accepted accounting principles (GAAP) and applicable grant requirements. Additionally, federal and other grant agreements require expenditures to be monitored to ensure costs are allowable, allocable, reasonable, and within approved budget limits. GAGAS requires that controls be designed and implemented to provide reasonable assurance regarding the reliability of financial reporting and compliance with laws, regulations, and grant agreements. Cause: The primary cause of the deficiency was insufficient oversight and monitoring of grant budgets by management. Specifically: Grant expenditures were not routinely compared to approved budgets. Budget-to-actual analyses were not performed or reviewed on a timely basis. Responsibilities for grant financial oversight were not clearly defined. Management did not take timely corrective action when overspending trends were identified. Effect: As a result of ineffective grant budget management, Kankakee County Community Services, Inc. exceeded approved grant budgets and incurred costs that were not fully reimbursable. This contributed to a net operating loss for the fiscal year and increased financial risk to the Organization. Additionally, the deficiencies resulted in a material misstatement risk within the financial statements and increased the likelihood of noncompliance with grant requirements, including spending grant advances on unrelated expenditures, potential questioned costs or required repayment to grantors. Recommendation: We recommend that management strengthen internal controls over grant budget management by: Implementing formal policies and procedures for grant budget monitoring. Performing and documenting routine budget-to-actual analyses for each grant. Clearly assigning responsibility for grant financial oversight. Establishing thresholds for investigation and escalation when expenditures approach or exceed budget limits. Providing training to staff responsible for grant accounting and financial management. View of responsible officials: Management agrees with the finding and has committed to a corrective action plan. Finding Number: 2024-002 represents a material weakness in internal control over compliance with Kankakee County Community Services, Inc.'s major federal program and material non-compliance with the cash management and reporting requirements of the major federal program. Repeat Federal Award Finding: No Questioned Costs: None Major Program: AL#93.568 Low-Income Home Energy Assistance Program