Finding Text
Criteria: Revenue was not recognized in accordance with generally accepted accounting principles, specifically related to grant funding. Grants may be either exchange or non-exchange transactions. Condition and Context: Throughout the performance of audit procedures, the auditor identified several grants that were mis-identified as to type of grant, affecting revenue, deferred revenue, accounts receivable and refundable advances. Cause: The Organization has limited resources to identify types of grants and the appropriate accounting principle applications. Effect: Revenue was not recognized appropriately based on the type of grant received throughout the year. The lack of appropriate recognition may result in the occurrence of unauthorized or inaccurate activity recorded within the Organization’s records and reflected on the interim financial statements. Recommendation: Revenue streams should be analyzed for type of grant transaction (exchange vs. nonexchange). Appropriate accounting principles should be applied based on the grant type. Management Response: Revenue streams will be analyzed, identifying type of grant transaction to determine the appropriate recording of revenue, see corrective action plan. Repeat Finding: This finding is a repeat of prior-year Finding 2024-002. The corrective action plan developed by management has an implementation date of the beginning of fiscal year ending June 30, 2026. As the corrective actions had not yet been implemented during the year ended June 30, 2025, audit procedures continued to identify grants that were incorrectly classified as exchange or nonexchange transactions, resulting in adjustments to revenue, deferred revenue, accounts receivable, and refundable advances. Accordingly, the finding is repeated in the current year.