Finding Text
INTERNAL CONTROL OVER FINANCIAL REPORTING: REVENUE RECOGNITION- material weakness. Unreimbursed costs billable to certain grants should be recorded as a receivable in the period the costs were incurred (to match revenues and expense). Cash received from grantors in advance of costs incurred should be recognized as deferred revenue. Earned revenue, including fees for services, should be accrued when all performance obligations have been satisfied. Promises to give, including those for donor restricted purposes, should be recorded in the fiscal year when unconditionally promised, rather than recorded in deferred revenue. During fiscal 2024, the Agency reporting monthly financial results on a modified cash basis, converting to GAAP basis at year end. The cutoff of revenue and receivables was not complete and certain promises to give had been recorded to equity. There were material audit adjustments to revenue, net assets, and receivables. IGAAP revenue recognition policies and procedures (by revenue stream have not yet been formally documented and requisite training held. Personnel who process and/or record billings and cash receipts should be trained and understand GAAP revenue recognition criteria, as well as controls over revenue cutoff to ensure completeness of revenues and support. The revenue recognition criteria vary according to the revenue stream (contracts with customers versus gifts and contributions; donated goods versus donated services,etc.). Those policies should include the following: Donor promises to give, including those for donor restricted purposes, should be recorded as revenue when unconditionally promised. Conditional promises to give should be tracked and disclosed in the notes to the financial statements. etc.). Unreimbursed costs billable to grants and contracts should be recorded as a receivable in the period the costs were incurred (to match revenues and expense). Cash received from grantors in advance of costs incurred should be recognized as deferred revenue. Earned revenue, including fees for services, should be accrued when respective performance obligations have been satisfied. A revenue docket is often helpful to document consideration of performance obligations and when those obligations were satisfied prior to contract revenue recognition (ASC 606). Donated goods and services, should be tracked via timesheets and logs, respectively, and recorded at estimated fair value when received according to GAAP recognition criteria and by grant activity.