Finding Text
CARESTL HEALTH SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2022 34 SECTION - FINANCIAL STATEMENTS FINDINGS (Continued) Recommendation We recommend that management implement a comprehensive remediation plan to strengthen financial reporting processes, including: • Ensuring the trial balance is complete, accurate, and finalized prior to audit • Preparing and maintaining reliable rollforward schedules that agree to the general ledger • Performing timely and accurate reconciliations of all key accounts, particularly cash • Establishing procedures to ensure all financial transactions are supported with adequate documentation • Implementing review and approval controls over financial records and reconciliations • Evaluating staffing and resources to ensure the accounting function can meet reporting requirements Strengthening these areas is critical to improving the accuracy, reliability, and auditability of the organization’s financial statements. Management Response Management respectfully disagrees with the characterization that the financial statements finding reflects a material weakness in CareSTL Health’s internal controls or financial reporting processes. The conditions described in the finding were not the result of inadequate accounting practices or lack of oversight, but rather the direct consequence of an abrupt and unexpected disruption outside the organization’s control. Specifically, CareSTL Health was suddenly and without notice shut out of the audit portal maintained by the previous auditor, which immediately terminated our access to all fieldwork, schedules, reconciliations, and supporting documentation that had been prepared by the external consultant accounting group working with that auditor. This included months of work product, trial balance support, rollforward schedules, reconciliations, and documentation that had already been compiled for audit readiness. When access was revoked, all consultant prepared materials were lost, and the organization was forced to reconstruct audit support from scratch. This loss of access—not a failure of internal controls—resulted in the incomplete or inconsistent schedules observed at the start of the audit. The organization was not given sufficient time to rebuild the documentation that had already existed and had been prepared for the prior audit team. The disruption was compounded by staffing shortages, reimbursement only funding constraints, and overlapping federal deadlines, all of which limited the organization’s ability to rapidly recreate the lost materials. CARESTL HEALTH SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2022 35 SECTION - FINANCIAL STATEMENTS FINDINGS (Continued) Despite these challenges, CareSTL Health maintains internal controls, accounting processes, and reconciliation procedures consistent with GAAP and the COSO framework. The organization performs routine reconciliations, maintains supporting documentation, and follows established financial reporting practices. Had the prior auditor not terminated access to the audit portal and consultant workpapers, the financial records would have been complete, accurate, and audit ready at the commencement of fieldwork. Management agrees with the recommendations provided and has already begun implementing enhancements to strengthen financial reporting and audit readiness, including: ▪ Ensuring the trial balance is finalized prior to audit ▪ Maintaining roll forward schedules that reconcile to the general ledger ▪ Performing timely and accurate reconciliations of all key accounts ▪ Strengthening documentation retention and support for all transactions ▪ Implementing review and approval controls over financial records ▪ Evaluating staffing and resources to ensure adequate accounting capacity These improvements, combined with the corrective actions outlined in our HRSA financial management response, will ensure that future audits proceed efficiently and that all required documentation is readily available.