Finding 1205654 (2025-003)

Criteria The Organization is responsible for designing, implementing, and maintaining effective internal controls over financial reporting to provide reasonable assurance that the internal controls will prevent misstatements or detect and correct misstatements on a timely basis, intentional or unintentional, from occurring. Condition and Context One significant audit adjustment was required to present the Organization's financial statements and Schedule of Expenditures of Federal Awards (SEFA) in accordance with U.S. GAAP. U.S. GAAP requires that revenue should be recorded on the financial statements and SEFA in the period it is earned. The Organization recorded federal grant reimbursement for construction totaling approximately $314,500 in the year it was billed, rather than in the year that it was earned. This was corrected by an audit adjustment to record the grants receivable and related revenue as of September 30, 2025. This also resulted in the SEFA being understated by this amount, prior to adjustment. Cause and Effect The condition identified was the result of the Organization's not implementing a process of internal control sufficient to prevent or detect and correct timely an understatement of revenue and grants receivable. The construction of the project had incurred approximately $314,500 of reimbursable costs for which grants receivable were not recorded as of September 30, 2025, resulting in an audit adjustment. Recommendation We recommend that the Organization record an adjustment at the end if its fiscal year to record the earned revenue in the financial statements and SEFA in accordance with U.S. GAAP. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding. See attached Planned Corrective Actions.