Finding Text
2023-001 Internal Control Over Financial Reporting - Account Reconciliations Criteria or Specific Requirement: An accounting system and respective internal controls should provide timely and accurate information for management. The reconciliation of account balances is an integral internal control activity to determine that stated account balances are accurate and fairly reported. Management and accounting personnel should reconcile general ledger accounts to subsidiary ledgers and other supporting documents in a timely and effective manner. Condition: Neighborhoods, Inc. of Battle Creek (NIBC) did not reconcile most all asset and liability accounts on the general ledger for the year ended June 30, 2023. For cash, no reconciliations could be provided at June 30, 2023 which required us to manually create a reconciliation based on the July 2023 bank statements. Reconciliation of these accounts required auditor assistance and required extensive research and data gathering by NIBC to adjust account balances. Despite these efforts, a disclaimer of opinion was issued on the audited financial statements due to an inability to adequately reconcile grant revenue which has potential effects on grants receivable, refundable advances and net assets. Effect: Without performing adequate account reconciliations, information provided to management is inaccurate. Also, the probability that fraud or material errors will occur and go undetected increases. Additionally, the June 30, 2023 audit was not submitted within nine months after the fiscal year end as required by Uniform Guidance. Cause: Turnover in fiscal and management positions resulted in individuals not being aware of the nature of account balances and how to reconcile them. Additionally there were changes in systems which created further difficulties in locating historical information. Auditor's Recommendation: We recommend NIBC implement procedures to ensure accounts are reconciled timely and accurately. Questioned Costs: None View of Responsible Officials: Management agrees with the findings and has written a corrective action plan. Federal Program Information: Funding agency: Department of the Treasury, passed through the Battle Creek Community Foundation Title: Emergency Rental Assistance Program AL number: 21.023