Finding Text
Type of Finding: ? Material Weakness in Internal Control over Financial Reporting Condition: A restatement was required of prior year net assets with donor restrictions. Criteria or specific requirement: Appreciation, under the rules of UPMIFA, is to be reported as net assets with donor restrictions until appropriated for expenditure. During 2022, it was determined that, although donor wishes were being adhered to, the appreciation on certain donor endowed funds was being reported as net assets without donor restrictions. Effect: Net assets with donor restrictions was understated by $1,969,617 at the beginning of the year. Cause: Toledo Alliance for the Performing Arts (TAPA) was following the guidance of the predecessor auditor and an attorney when adopting UPMIFA. Repeat Finding: No. Recommendation: Toledo Alliance for the Performing Arts should evaluate their financial reporting processes and controls to determine whether additional controls over the preparation of annual financial statements should be implemented to provide reasonable assurance that financial statements are prepared in accordance with GAAP and the requirements of UPMIFA. Views of responsible officials and planned corrective actions: Management understands that the board of trustees and management share the ultimate responsibility for the internal control system, including the preparation of the financial statements in accordance with GAAP, and feels they have taken the appropriate steps for an entity of their size. Since, the above condition was brought to their attention, management has thoroughly researched UPMIFA, including some of the common mistakes when applying the rules of UPMIFA, and understands what is to be done to correctly classify the appreciation of donor endowed funds going forward.