Finding Text
2023-001 Material Adjustment
Criteria: Management is responsible for preparing financial statements in accordance with accounting principles generally accepted in the United States of America.
Condition: Insufficient controls over financial reporting. A material audit adjustment was required to prevent the financial statements from being materially misstated.
Cause: During fiscal year 2023, AIDS Ministries took control of the Refresh board of directors resulting in consolidated financial statements for the year ended June 30, 2023. The activity recorded for federal
grants on Refresh’s accounts were not recorded properly and thus material journal entries were required to correct the activity.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports. The risk with this condition is that necessary adjustments to the financial statements to record material
misstatements may be missed and there is no control in place to detect and correct this condition.
Questioned Costs: None noted.
Recommendation: Improve internal controls to prevent these types of adjustments. Ensure processes are in place to include all fiscal year activity for the year.
Views of Responsible Officials and Planned Corrective Actions: Prior to the merger of Refresh and AIDS Ministries/AIDS Assist, the financial statements and polices for Refresh were not monitored consistently by previous management/board of directors. Since the merger Refresh has adopted all financial policies of AIDS Ministries/AIDS Assist. Management will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstsated financial statements and increase the accuracy of the interim financial reports used by management for Refresh accounts.