Finding 369691 (2022-001)

Criteria: The QuickBooks file is maintained by an external accountant; a copy of the QuickBooks file is not provided to the Organization. The external accountant compiles the financial statements on a monthly basis for management. A breakout of the grants is not included in the compiled financial statements. Job reports are provided to management on an interim basis from QuickBooks for management to complete grant reporting. The Organization also lacks controls and segregation of duties over the deposit process. Condition and Context: While material variances were not ultimately noted during testing, discrepancies were found on multiple awards between the QuickBooks file and the filed reports. The QuickBooks data appears to have been changed subsequent to the reports being provided to management for grant reporting. The deposits are primarily handled by one person with little oversight. Timing differences may occur between receipt of payment and deposit into the financial institution. Effect: The grant reports filed did not match the expenses in QuickBooks, which could lead to incorrect filings and requests for reimbursement. Receipts could potentially be misappropriated. The financial records may not reflect the correct revenue and/or receivables for the period due to timing differences. Cause: Expenses were changed after a report was given to the Organization and amended grant reports were not filed. The QuickBooks data is not being reviewed by the Organization once a grant report is filed. The information provided to the Organization is only for the current period grant report. There is not currently a review and/or reconciliation of the bank statement in comparison to the deposit log. Recommendation: The Organization should review the information posted in QuickBooks for accurate reporting, which could include a Profit and Loss by Job report. Implementation of procedures to ensure the Organization is reviewing the QuickBooks data and looking over revenue and expenses for each grant. The QuickBooks file could be locked after month-end close to mitigate changes subsequent to information being provided to management. We recommend routine review and reconciliation of the bank statement to ensure all receipts are included and activity through the bank accounts appear to be in accordance with the activities of the Organization. Management Response: Management agrees with finding. Procedures are being implemented to ensure an appropriate review process, see attached corrective action plan.