FAC Explorer

Finding 38915 (2022-002)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-09-24
Audit: 44333
Organization: Act for Alexandria (VA)
Auditor: Marcum LLP

AI Summary

  • Core Issue: Conditional contributions were recorded as revenue prematurely, leading to inaccuracies in financial statements.
  • Impacted Requirements: The SEFA was not prepared in accordance with 2 CFR 200.508(b) and 200.510, resulting in overstated net assets and expenditures.
  • Recommended Follow-Up: Management should enhance policies and procedures to ensure proper recognition of contributions and accurate SEFA preparation.

Finding Text

Finding 2022-002: SEFA Preparation Agency U.S. Department of Treasury pass-through from City of Alexandria ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number 55-547-8853 Criteria In accordance with 2 CFR 200.508(b), the auditee is required to prepare appropriate financial statements, including the schedule of expenditures of Federal awards (SEFA) in accordance with ?200.510. Condition and Context During our audit, we identified a conditional contribution that ACT had recorded as revenue upon receipt of the advanced funds and before the applicable barrier to recognition had been satisfied. In addition, the full amount of advanced funds was presented on the schedule of expenditures of SEFA. As a result, net assets without donor restrictions were overstated in the financial statements and expenditures were overstated on the SEFA. Cause Controls and processes were not effectively designed to ensure conditional contributions are properly recorded within the general ledger and that the SEFA is complete and accurate. Effect Net assets without donor restrictions and expenses on the SEFA were overstated by $44,999 at December 31, 2022. Repeat Finding No Recommendation We recommend management review policies and procedures over contributions received to ensure timely and effective review for any barriers to recognition and over preparation of the SEFA to ensure completeness and accuracy of the SEFA. Views of Responsible Officials of the Auditee Management agrees with the finding. See corrective action plan. Questioned Cost None.

Corrective Action Plan

ACT FOR ALEXANDRIA MANAGEMENT CORRECTIVE ACTION PLAN For the Year Ended December 31, 2022 TO: MARCUM LLP 1899 L Street NW, Suite 850 Washington, DC 20036 Finding 2022-001: Revenue Recognition ? Conditional Contributions; Finding 2022-002: SEFA Preparation Condition and Context: During our audit, we identified a conditional contribution that ACT had recorded as revenue upon receipt of the advanced funds and before the applicable barrier to recognition had been satisfied. In addition, the full amount of advanced funds was presented on the schedule of expenditures of federal awards (SEFA). As a result, net assets without donor restrictions were overstated in the financial statements and expenditures were overstated on the SEFA. Recommendation: We recommend management review policies and procedures over contributions received to ensure timely and effective review for any barriers to recognition and over preparation of the SEFA to ensure completeness and accuracy of the SEFA. Views of Responsible Officials and Planned Corrective Action: ACT agrees with the finding and the auditors? recommendation. One ACT?s fiscal sponsorship funds received advance payments of conditional awards. This is a rare circumstance. As a result, there was a learning curve on our part related to when fiscal sponsorship fund revenue should be recognized related to conditional award advances. Going forward, we will ensure that fiscal sponsorship fund conditional awards are reported as revenue and expense only once barriers are fully satisfied. This will allow for accurate reporting for both financial statement and SEFA purposes. For further discussion, please contact Heather Peeler, President and CEO at heather.peeler@actforalexandria.org, 703-739-7778. Heather Peeler President and CEO

Categories

Reporting

Other Findings in this Audit

  • 38916 2022-002
    Significant Deficiency
  • 615357 2022-002
    Significant Deficiency
  • 615358 2022-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $653,815