Finding Text
2022-003 Application of Cash Receipts Criteria: Grant receivables in the consolidated statement of financial position should be properly supported by a grant receivables subsidiary ledger by grantor/funder. Condition: The grant receivables subsidiary ledger had not been updated since September 2022, and that cash receipts had been applied directly to the grants receivable general ledger. This methodology resulted in the incorrect application of cash receipts to debtors/grantors which resulted in incorrect balances for individual grantors listed under grants receivable and deferred revenue. The correct application of cash receipts to individual grantors in order to correctly reflect grants receivable balances and deferred revenue balances is important to proper revenue recognition for Community Development Block Grant (Assistance Listing Number 14.218) and the Prevention and Treatment of Substance Abuse (Assistance Listing Number 93.959). This finding is considered a significant deficiency. Balances were corrected by the conclusion of the audit. Cause: The staffing changes in the Facility?s finance department directly impacted the proper accounting over grants receivable and deferred revenue. Effect: Grant receivables and deferred revenue composed of various grantors/funders and the Facility should be aware of the balances due, collected and received in advance at any point in time. These balances have a direct impact on the revenue generated by the Facility for the provision of program services. Recommendation: The Facility should continue to utilize the grants receivable subsidiary ledger and correctly match cash receipts to the appropriate grant receivable funder and utilize any deferred revenue from the respective funder where appropriate. Proper management of receivables and deferred revenue is necessary for proper revenue recognition and cash management. Views of Responsible Official and Planned Corrective Action: The Chief Executive Officer and Chief Financial Officer will ensure that a complete and accurate grant receivables subsidiary ledger and detailed deferred revenue is maintained and reviewed regularly throughout the year.