Finding 399950 (2022-002)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2024-06-05
Audit: 308108
Auditor: Sikich LLP

AI Summary

  • Core Issue: Internal controls over billing and accounts receivable are ineffective, leading to discrepancies and material adjustments in financial reporting.
  • Impacted Requirements: There should be effective controls to prevent discrepancies and annual reconciliations of accounts receivable to resolve significant credit balances.
  • Recommended Follow-Up: Management should review and improve internal controls over billing and accounts receivable to ensure accurate revenue reporting.

Finding Text

Condition: During our review of the December 31, 2022 Accounts Receivable detail, it was noted that controls over billing and accounts receivable were not properly designed resulting in material adjustments in the reporting of Accounts Receivable and relating revenues. Per review of the Accounts Receivable detail as part of the audit procedures, there were noted to be significant unresolved credit balances as of December 31, 2022. Upon investigation by Management, it was noted that invoices entered in QuickBooks did not match the actual amounts billed through the Federal billing system. Therefore, when payment was received from the Federal agency, the cash receipt did not agree with the relating invoice in QuickBooks and therefore could not be relieved. Criteria: Effective internal controls should be established to prevent or detect discrepancies between billing and the general ledger to ensure revenue is properly captured. Further, accounts receivable should be reconciled at a minimum annually resolving any significant credit balances. Cause: Internal controls over billing and accounts receivable are not designed effectively to ensure completeness and accuracy of revenues and accounts receivable. Effect: As a result of the condition noted above, material adjustments were required in the reporting of accounts receivable on the consolidated statement of financial position and revenues on the consolidated statement of activities. Recommendation: We recommend that management review current internal controls over billing procedures and accounts receivable reconciliation to ensure that revenue is properly accounted for.

Corrective Action Plan

Accounts receivable is currently being reconciled to payments and recorded accurately in the proper period. During 2022 there were challenges with a change in the accounting staff which led to discrepancies and errors in AR. Invoices are vetted for accuracy and timeliness.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 399949 2022-001
    Material Weakness
  • 399951 2022-004
    Significant Deficiency
  • 399952 2022-005
    Significant Deficiency
  • 399953 2022-006
    Significant Deficiency
  • 976391 2022-001
    Material Weakness
  • 976392 2022-002
    Material Weakness
  • 976393 2022-004
    Significant Deficiency
  • 976394 2022-005
    Significant Deficiency
  • 976395 2022-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.566 Refugee Resettlement Social Services Program $584,937
19.510 Reception and Palcement Program $475,266
93.567 Voluntary Agencies Matching Grant Program $471,937
93.576 Preferred Communities Program $307,411
19.510 Afghan Placement and Assistance $213,362
93.576 Resource Specialist $33,347
93.598 Afghan Placement and Assistance $2,961