Finding 1206278 (2024-001)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2024
Accepted
2026-04-09
Audit: 398306
Auditor: FRANKEL LLC

AI Summary

  • Core Issue: There are inadequate controls over accounting records, leading to delays in account reconciliation and incorrect postings.
  • Impacted Requirements: The organization failed to meet 2 CFR 200 standards for effective operations, reliable reporting, and compliance.
  • Recommended Follow-Up: Develop and implement policies and procedures for timely account reconciliation and monitoring to prevent future issues.

Finding Text

Inadequate controls over the preparation of accounting records. Type of Finding Material Weakness Criteria Per 2 CFR 200, internal control for recipients and subrecipients should have processes designed and implemented to provide reasonable assurance regarding the 1)effectiveness and efficiency of operations; 2) reliability of reporting for internal and external use; and 3) compliance with applicable laws and regulations. Condition Organization employees performing their assigned duties were unable to timely reconcile accounts to subsidiary records or timely identify billing issues and concerns resulting in under billings on grants and material adjustments as part of the audit process. In addition, numerous authorization controls and controls over reporting were circumvented resulting in transactions being incorrectly posted in the account records. The Organization implanted a new general ledger software package and procedures were not in place to ensure that balances were appropriately transferred with sufficient detail to allow for proper treatment in the current period. Cause Due to staff turnover before, during and shortly after the audit period, the Organization had not developed policies, procedures and controls to provide for the appropriate monitoring of accounting procedures, nor had they developed a succession plan in the event of significant employee turnover. Effect The Organization’s books and records were not timely available for audit thus causing the audit to be filed late with numerous regulatory agencies. Questioned costs None Repeat finding Yes, 2023-001 Recommendation The Organization should develop policies, procedures and controls to ensure that accounts are reconciled on a timely basis by employes performing their assigned duties and monitoring is performed to ensure such is completed. View of Management Management concurs with the above finding.

Corrective Action Plan

Management acknowledges this finding and recognizes the importance of maintaining adequate internal control over the preparation and review of accounting records. This finding was also reported in the prior fiscal year, however due to turnover within key finance leadership roles and limited staff capacity and expertise during the audit period, the previously planned corrective actions were not fully implemented. While improvement began toward the end of Fiscal Year 2025 (FY25), management acknowledges that the implementation of strengthened internal control procedures will continue into Fiscal Year 2026 (FY26), as the newly established finance team further develops and formalizes these processes. The Finance Department experienced turnover within key finance leadership roles, which limited the department's capacity and expertise necessary to implement the corrective actions and process improvements identified in the prior year audit. The organization has since strengthened the finance department by hiring additional staff to support the implementation of improved internal controls, formalized procedures, and regulatory reporting processes. Finance leadership has implemented additional review procedures over the preparation of the accounting records including supervisory review of journal entries, documented monthly account reconciliations and a standardized month-end checklist. These procedures will help ensure accounting records are accurate, complete and reviewed timely. While improvements begin during the end of FY25, full implementation of these process improvements will continue into FY26 to ensure sustainable internal control practices and timely regulator reporting. Responsible party: Finance Management Target Completion Date: June 30, 2026 Monitoring: Management reviews the month end close calendar monthly to ensure all reconciliation, journal entries, and reporting are completed and documented. Finance management also reviews monthly financials with the program leaders during soft close.

Categories

Subrecipient Monitoring Reporting Material Weakness

Other Findings in this Audit

  • 1206279 2024-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.558 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES $2.43M
93.556 MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES PROGRAM $651,139
93.870 MATERNAL, INFANT AND EARLY CHILDHOOD HOME VISITING GRANT $355,680
93.658 FOSTER CARE TITLE IV-E $88,475
10.558 CHILD AND ADULT CARE FOOD PROGRAM $24,625