Finding Text
Finding #2022-001 – Material Weakness – Accounting Recordkeeping
All programs
Other
Criteria
Accounting tasks such as timely monthly analysis, reconciliations and review of accounts play a key role in
providing the accuracy of accounting data and information included in the interim and year-end consolidated
financial statements. Trial balances should be maintained for the Organization continuously, in accordance with
U.S. GAAP. Detailed supporting schedules should be maintained for all significant asset, liability, revenue and
expense accounts. Reconciling items should be investigated and resolved in a timely manner. All of the
forementioned items are essential to ensure that financial statements and data collection forms are submitted in conformance with 2 CFR Section 200.512(a)(1), certain tax returns, and certain grant agreements.
Condition
During the year ended June 30, 2022, management was unable to provide timely year-end trial balances in
accordance with U.S. GAAP without significant adjusting journal entries required to accurately reflect the
underlying accounting transactions.
Cause
The Organization’s Accounting/Finance Department experienced a backlog of recording transactions and
invoicing during the year ended June 30, 2022. This resulted in reconciliations not being performed timely.
Effects
Not performing timely and complete monthly and year-end account reconciliations and closing procedures leads
to a continually and growing backlog of transactions and journal entries that are not posted to the accounting
system, which renders the accounting information ineffective for making well-informed business decisions. This has led to the expenditure of significant time and effort by many to complete the required reconciliation
procedures and prevented the timely delivery of financial statements to management, Board members and
funders. In addition, due to the delay in the reconciliation process, the Organization restated June 30, 2021 net asset balances to correct a misstatement and was unable to meet the required reporting deadlines noted in 2 CFR Section 200.512(a)(1), certain tax returns, and certain grant agreements.
Questions Costs
None.
Perspective
This audit finding is systematic.
Statistical Sample
A statistical sample is not applicable to this finding.
Repeat Finding
This audit finding is a repeat finding.
Recommendation
We recommend that individuals overseeing the accounting and finance department continue to review the
Organization’s current accounting policies and update existing policies or implement new policies, as needed, to
ensure that the trial balances are accurately maintained throughout the year, reconciliations are completed and
reviewed monthly or quarterly, as appropriate, and the trial balances and related supporting schedules are
prepared and reviewed timely after year-end.
Views of Responsible Officials
Management agrees with the finding. The Organization is working with external consultants to improve the timeliness of reconciliations and audit preparation. We are continually making accounting policy changes which will correct some of the issues noted. Management is confident that the issues that have been noted will be rectified in the fiscal year ending June 30, 2023.