Finding Text
Statement of Condition Grand Prairie Services and Affiliates was unable to provide timely year-end trial balances in accordance with U.S. GAAP and therefore did not submit its audited financial statements, SEFA, and other required information to the Federal Audit Clearinghouse by the required due dates. Criteria Grand Prairie Services and Affiliates is required to submit audited financial statements, a schedule of expenditures of federal awards (SEFA) and Uniform Guidance reports to the Federal Audit Clearinghouse. All items are required to be submitted to the Federal Audit Clearinghouse within nine (9) months after Grand Prairie Services and Affiliates’s fiscal year-end. Accounting tasks such as timely monthly analysis, reconciliations and review of accounts play a key role in providing the accuracy of accounting data and information included in the interim and year-end consolidated financial statements required for submission. Trial balances should be maintained for the Organization continuously, in accordance with U.S. GAAP. Detailed supporting schedules should be maintained for all significant asset, liability, revenue and expense accounts, including performing an analysis of receivables under ASC 326 to measure allowance for credit losses in accordance with U.S. GAAP. Reconciling items should be investigated and resolved in a timely manner. All of the aforementioned items are essential to ensure that financial statements and data collection forms are submitted in conformance with 2 CFR Section 200.512(a)(1), certain tax returns, and certain grant agreements. Cause The Organization did not maintain an effective process to ensure timely preparation and submission of required Federal reporting. The primary cause of the delayed submission was the Organization’s inability to close its books timely at fiscal year-end. The absence of formal month-end and year-end close procedures, including insufficient account reconciliation schedules, undefined close deadlines, and a lack of monitoring controls, prevented the accounting department from producing accurate and complete financial data within the timeframes necessary to support a timely audit. The Organization also lacked formal procedures for evaluating the collectibility of aged accounts receivable in accordance with ASC 326 as part of the close process. Specifically, there were no defined criteria or controls requiring review of balances aged beyond 180 days or outstanding for multiple years, and no systematic process for incorporating historical collection experience or current conditions into the allowance estimate under U.S. GAAP. Without a reliable and repeatable close process, the audit could not commence or progress on schedule, creating delays throughout the entire financial reporting cycle. In addition to this, there were broader deficiencies in planning, coordination, and monitoring of the audit and financial reporting process, including a lack of defined timelines, insufficient tracking of deliverables, and inadequate controls to identify and address delays. Additionally, personnel turnover within the accounting department and limited process documentation contributed to the Organization’s inability to meet reporting deadlines. Effect Noncompliance with financial reporting deadlines could cause funding sources for Grand Prairie Services and Affiliates to suspend funding until compliance is achieved. Questioned Costs None noted. Perspective This audit finding is systematic. Statistical Sample A statistical sample is not applicable to this finding. Repeat Finding This audit finding is a repeat finding. Recommendation Management should establish and implement formal procedures to ensure timely completion and submission of required Federal reporting. As a foundational step, management should develop and enforce a formal month-end and year-end close process that includes defined close deadlines, assigned responsibilities for each close task, a documented reconciliation checklist, and supervisory review controls to ensure the books are closed accurately and on schedule prior to the commencement of the annual audit. Without a reliable close process, downstream reporting timelines cannot be met. In addition to close procedures, management should implement a documented audit timeline aligned with Federal reporting deadlines, including defined roles and responsibilities and monitoring controls to track progress and escalate delays. Management should also enhance process documentation and cross-training to mitigate the impact of personnel changes and support continuity of the reporting process. Management should also establish formal policies and procedures for estimating the allowance for credit losses in accordance with ASC 326. Such procedures should include a defined aging review process that specifically addresses balances aged beyond 180 days and receivables outstanding for multiple years, a documented methodology for incorporating historical collection rates and current economic conditions into the estimate, and a supervisory review and approval control over the allowance calculation prior to financial statement issuance. These controls should be performed as a routine component of the year-end close process to ensure the allowance is complete, supportable, and consistently applied. View of Responsible Officials Management agrees with the finding. Management will establish procedures and monitor compliance with those procedures to ensure that the audited financial statements, schedule of expenditures of federal awards, and other required information is filed with the Federal Audit Clearinghouse by required due dates.