Finding Text
Finding Number: 2025-002 Repeat Finding: No Type of Finding: Material Weakness in Internal Control Over Financial Reporting Description: Account Reconcilations Major Program: Aging Cluster Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: During our review of cash accounts and related reconciliations, we noted that certain year-end reconciliations were inaccurate or had not been reviewed. These conditions resulted in uncorrected misstatements, as summarized in the attached schedule. Criteria: Management is responsible for establishing and maintaining effective internal control over financial reporting to provide reasonable assurance that financial information is accurate, complete, and available on a timely basis. Effective internal controls include timely and accurate reconciliation of cash and other key balance sheet accounts, together with documented review and approval by an individual separate from the preparer. Cause: The Agency’s month-end and year-end close procedures did not consistently require reconciliations for cash and other key balance sheet accounts to be prepared accurately, completed timely, and reviewed by a separate individual. In addition, evidence of review, including the date of review and follow-up on reconciling items or unusual balances, was not consistently documented. Effect: As a result, errors in cash and related balance sheet accounts were not prevented or detected and corrected on a timely basis, resulting in uncorrected misstatements. Inaccurate or unreviewed reconciliations increase the risk that financial information provided to management and those charged with governance may be incomplete, inaccurate, or not available timely for decision-making and financial reporting purposes. Recommendation: We recommend that the Agency strengthen its month-end and year-end close procedures by requiring a designated individual to prepare reconciliations for cash and other key balance sheet accounts and requiring a separate individual to review and approve those reconciliations. Evidence of review should be documented, including the date of review and any follow-up performed on reconciling items or unusual balances. View of Responsible Officials: Management agrees with the finding and has developed a written corrective action plan.