Finding 1229282 (2025-001)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2025
Accepted
2026-09-10

AI Summary

  • Core Issue: The supervisory review of accounting functions is insufficient, leading to inaccuracies in financial reporting.
  • Impacted Requirements: Accurate records are necessary for GAAP compliance and grant reporting; missing subcontractor invoices resulted in a $559,000 adjustment.
  • Recommended Follow-Up: Management should create and enforce procedures for timely account reconciliations and supervisory reviews.

Finding Text

2025-001 Supervisory Review of Accounting Function Criteria: Accurate and timely records are required for GAAP and grant reporting. Condition: The Supervisory review of various accounting functions was lacking. We noted the following during the audit: • There is a procedure to close the books monthly by a certain date, even if certain subcontractors have not submitted invoices for that time period. While this procedure may be acceptable for the interim period, at September 30, all subcontractor invoices must be recognized. We made an adjustment of approximately $559,000 primarily for August and September subcontractor invoices that had not been accrued. • The “Profit and Loss by Job” report did not agree to the MFP grant. Cause: There were no written procedures to require account reconciliations and the supervisory review of those reconciliations. Effect: In order for the financial statements to be fairly stated, the auditors made adjustments, some of which were material. Recommendation: We recommend that management develop and implement procedure to perform and review all account reconciliations on a timely basis.

Corrective Action Plan

2025-001: Supervisory Review of Accounting function Management Response and Corrective Actions Taken: Management acknowledges that certain subcontractor invoices incurred prior to September 30 were not accrued, resulting in an audit adjustment. While the adjustment was necessary, management does not believe the issue resulted from a lack of oversight. During the fiscal year, management and the board identified concerns within the finance department to stregthen financials management and internal controls. Action taken included revising the organization's fiscal policies, engaging an independent firm to asses the finance department, obtaining Board oversight and approval throughout the process, documenting critical accounting procedures, and implementing additional financial oversight during the transition. Management also strengthened year end closing procedures by establishing documented account reconciliation, review, and accrual processes to ensure liabilities are recorded in the proper reporting period regardless of invoice receipt date. Manamgement believes these actions demonstrate proactive oversight, transparency with the board, and committement to stregthening the oprganization's internal control enviroment while reducing financial and operational risk. Anticipated completion date: Implemented March 2026

Categories

Reporting

Other Findings in this Audit

  • 1229283 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.791 MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION $7.73M
84.421 DISABILITY INNOVATION FUND (DIF) $1.26M