Finding Text
Finding 2023-009—Reconciliations of Accounts Material Weakness See Finding 2023-003 Federal Program: All federal awards. Questioned costs: None noted. Context: IFDC implemented or maintained an accounting system that was not properly configured to accurately carry forward prior-year audited balances into the current fiscal year. As a result, numerous balance sheet accounts contained beginning balances that did not reconcile to the audited 2022 financial statements and required significant management effort to investigate and reconcile. The inability of the accounting system to generate accurate beginning balances impaired management's ability to produce reliable financial information and increased the risk that errors or misstatements could occur and remain undetected. Because accurate financial records are necessary to prepare financial statements in accordance with 2 CFR 200.508 and other applicable reporting requirements, this condition represents a deficiency in the organization's financial reporting process. Repeat Finding: No Finding 2023-003—Reconciliations of Significant Accounts Material Weakness Criteria: In accordance with 2 CFR 200.508, the auditee must prepare appropriate financial statements. Management of IFDC has elected to follow generally accepted accounting principles (GAAP). Condition: During our audit, we noted various accounts that were not properly reconciled during the year; specifically, receivables and liabilities were overstated and grant revenue and subgrantee expenses were also overstated. IFDC was recording expense and liability and related grant revenue and receivable for amounts that were approved to be sent to the grantees but were instead in liabilities, overstating grant revenue and related subgrantee expenses and the Schedule of Expenditures of Federal Awards. Cause: The cause is a result of the lack of appropriate and timely reconciliations of the accounts and reviews during the fiscal year ended December 31, 2023. Effect: There were numerous entries during the audit, resulting in management having to reconcile all accounts and provide new trial balance and new schedules. Recommendation: We recommend that management revise internal control and review processes around monthly financial statements for financial reporting to ensure accurate preparation of the financial statements in accordance with GAAP. Subgrantee expenses and related grant revenue should be recognized when the expense is incurred. Views of responsible officials: Management agrees with the finding. See corrective action plan.