Finding 391288 (2023-004)

Material Weakness
Requirement
A
Questioned Costs
-
Year
2023
Accepted
2024-04-01

AI Summary

  • Core Issue: The Organization failed to accurately record expenditures for a federal program, leading to significant errors in financial statements.
  • Impacted Requirements: Internal controls over financial reporting were inadequate, preventing timely detection and correction of misstatements.
  • Recommended Follow-Up: Management should enhance year-end closing procedures and continue utilizing accounting staff for accurate financial entries and reconciliations.

Finding Text

2023-004 FINANCIAL REPORTING Assistance Living Number 20.933 The Organization did not properly record expenditures related to the federal program. 2023-002 FINANCIAL REPORTING Prior Year Finding Number 2022-002 Criteria A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements of the financial statement of a timely basis. Properly designed policies and procedures and implementation of the policies and procedures are an integral part of ensuring the reliability and accuracy of the Organization’s financial statements. Condition Significant year-end adjusting entries were not properly recorded in the Organization’s financial statements primarily related to the receivables and payables for the Water Trails Project. Adjustments were subsequently made by the Organization to properly include these amounts in the financial statements. Cause Reporting financial data reliably in accordance with generally accepted accounting principles requires management to possess sufficient knowledge and training to select and apply accounting principles and prepare financial statements including footnote disclosures. Management presently lacks the proper procedures to identify year-end accruals for receivables and payables. Effect Lack of proper procedures for preparing financial statements resulted in Organization employees not detecting the errors in the normal course of performing their assigned functions. As a result, material adjustments to the Organization’s financial statements were necessary. Recommendation Management should continue to work on year-end closing procedures to properly identify receivables and payables at June 30. The Organization should continue to utilize accounting staff to assist with the financial accounting system entries and bank reconciliations. Response The MPO hired an in-house accountant at the beginning of FY 2023 who has been responsible for recordings. The Accountant has received training in QuickBooks and also has worked with accounting/auditing professionals to both clean up past recording errors and to improve practices moving forward. Conclusion Response accepted.

Corrective Action Plan

The corrective action plan was documented in our response to the auditor’s comment. See the Schedule of Findings and Questioned Costs.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 391286 2023-003
    Material Weakness Repeat
  • 391287 2023-003
    Material Weakness Repeat
  • 967728 2023-003
    Material Weakness Repeat
  • 967729 2023-003
    Material Weakness Repeat
  • 967730 2023-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
20.933 National Infrastructure Investments $3.99M
20.205 Highway Planning and Construction $1.20M