Finding 370209 (2022-001)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2022

Accepted

2024-02-22

Audit: 291791

Organization: Envision Community Services INC (IL)

Auditor: Castillo & Company CPA LLC

AI Summary

Core Issue: Financial statements for FY 2021 were not reconciled and ready for audit until over eight months after year-end.
Impacted Requirements: Timely closure of financial statements is crucial for maintaining effective internal controls over financial reporting.
Recommended Follow-Up: Implement a transition plan for accounting firms to ensure smooth handovers and reduce delays in financial reporting processes.

Finding Text

The financial statements and certain key underlying schedules for fiscal year 2021 were not fully reconciled and available for audit purposes until more than eight (8) months after the fiscal year end. In order to maintain effective internal controls over financial reporting it is essential that financial statements be closed in a timely manner once the fiscal year ends. This condition was due to several factors including the termination of the prior accounting firm providing accounting and financial reporting services without a transition plan in place for the current accountant. As such, it appears that a lot of time was needed to learn the key accounting processes, accounting software and specific accounting and financial reporting issues which delayed the process of reconciling and closing the accounting records for fiscal year 2022. The effect is that controls over the financial reporting process were weakened thereby increasing the risk that material misstatements could be included in the financial statements without management being aware.

Corrective Action Plan

We will have our current accountant set a schedule for performing monthly closes of the financial statements so they can be presented in summary format to management and the board of directors. We will require that the President/CEO and other key members of the management team and the board of directors review the monthly financial reports provided by the accountant so that all board members understand the financial position and results of activities of ECS on a regular and consistent basis. Finally, we will develop a transition plan with procedures requiring that whomever is responsible for the accounting and financial reporting function for ECS reconcile all financial accounts and close the financial records for the month prior to departure to ensure a smooth transition ECS’s accounting and financial reporting function to the next person responsible for its maintenance

Other Findings in this Audit

946651 2022-001

Significant Deficiency Repeat

Programs in Audit

ALN	Program Name	Expenditures
84.351	US Dept of Ed	$416,000
14.218	US Dept of Hud	$262,572
84.287	US Dept of Ed	$200,343