Finding Text
Finding: The Organization has insufficient procedures and controls related to recording expenditures in the appropriate period. Criteria: A properly designed system of internal control over financial reporting requires entities to initiate, authorize, record, process and report financial data reliably in accordance with U.S. generally accepted accounting principles. Condition and Context: During the 2025 audit, the Organization determined there were construction costs incurred in 2024 that were not recorded as of December 31, 2024. The expenditures were paid directly to a contractor through the granting agency. Cause: Due to management turnover and the difficulties tracking the direct payment from the granting agency to the contractor during the 2024 year–end close, the processes and reconciliations required to track and account for expenditures were not completed accurately. Effect: The Organization’s 2024 year–end balance sheet account balances and federal expenditures were understated. Identification as a Repeat Findings: This is a repeat finding of 2024–001. Recommendation: We recommend that the Organization develop and maintain effective procedures and controls in order to record expenditures and provide accurate year–end account balances. This includes reviewing the direct payments made after year–end to ensure they are accounted for in the appropriate period. Response and Corrective Action Planned: The Organization will review and implement processes and controls to ensure they record expenditures in the appropriate period and provide accurate year–end account balances. Conclusion: Response accepted