FAC Explorer

Finding 400530 (2023-003)

Material Weakness Repeat Finding
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2024-06-11
Audit: 308538
Organization: Child Care & Nutrition INC (MN)
Auditor: Meulebroeck Taubert & CO Pllp

AI Summary

  • Core Issue: Inadequate segregation of duties in accounting due to limited staff, increasing risk of errors or fraud.
  • Impacted Requirements: Internal controls must ensure proper segregation of duties to prevent undetected issues.
  • Recommended Follow-Up: Management should implement oversight procedures and utilize board members for additional monitoring as staffing changes occur.

Finding Text

III. Major Federal Award Programs—Internal Controls Over Compliance Previously Reported Items Not Resolved: 2023-003 Internal Accounting Controls Criteria: Internal control should include an adequate segregation of duties in the accounting functions. Condition: Due to a limited number of office personnel, proper segregation of duties in the accounting functions is not always possible. Cause: This condition is not unusual where staffing size can result in an improper segregation of duties. Management has determined that given the size and resource limitations the desirable level of segregation of duties necessary may not be feasible. Effect: Without an adequate segregation of duties there are opportunities for errors or fraudulent activities to occur and remain undetected. Recommendation: We recommend that the organization’s management be aware of the lack of segregation of the accounting functions and implement oversight procedures to ensure that the internal control policies and procedures are being implemented by staff and encourage additional controls as they become available due to changes in staff, etc. Views of Responsible Officials: Management agrees with this finding. IV. Corrective Action Plan 2023-003 Name and Contact Person Responsible For Corrective Action Nicole Rasmussen, Executive Director Corrective Action Plan (CAP) Because it is economically infeasible to hire additional staff to adequately provide for the proper segregation of duties, the organization will utilize staff and board members to segregate duties to the extent possible. In addition, some transactions entered into by the organization are reviewed and observed by staff members of Brian Hildebrant, CPA., an independent consulting company. The company does not perform audit services but their observation does create an additional element of oversight. Planned completion date for CAP: N/A – requires ongoing monitoring Plan to monitor completion of CAP: The Executive Director and Board Members will monitor the internal control system to ensure oversight procedures are functioning as intended.

Corrective Action Plan

Child Care and Nutrition, Inc. respectfully submits the following corrective action plan for the year ended September 30, 2023. Audit period: October 1, 2022-September 30, 2023 The findings from the September 30, 2023 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINDINGS – FINANCIAL STATEMENT AUDIT MATERIAL WEAKNESS 2023-001 Internal Accounting Controls Recommendation: We recommend management be aware to the lack of segregation of duties within the accounting functions and provide oversight to ensure the internal control policies and procedures are being implemented by organization staff. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Organization will continue to review the accounting functions of all affected departments so segregate them as it is cost beneficial. Name of the contact person responsible for corrective action: Nicole Rasmussen, Executive Director Planned completion date for corrective action plan: September 30, 2024. MATERIAL WEAKNESS 2023-002 Annual Financial Reporting Under Generally Accepted Accounting Principles Recommendation: Management should continue to evaluate their internal staff capacity to determine if an internal control policy over the annual financial reporting is beneficial. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Organization understands this is required communications for the preparation of the financial statements and will continue to work at this area to achieve the overall goal. Name of the contact person responsible for corrective action: Nicole Rasmussen, Executive Director Planned completion date for corrective action plan: September 30, 2024. FINDINGS – FEDERAL AWARD PROGRAMS 2023-003 Internal Accounting Controls Federal Agency: U.S. Department of Agriculture Federal Program: Child and Adult Care Food Program CFDA Number: 10.558 Pass Through Agency: Minnesota Department of Education, Child Nutrition Section Pass Through Number: 1000003400 Award Periods: Year ended September 30, 2023 Recommendation: We recommend management be aware to the lack of segregation of duties within the accounting functions and provide oversight to ensure the internal control policies and procedures are being implemented by organization staff. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Organization will continue to review the accounting functions of all affected departments so segregate them as it is cost beneficial. Name of the contact person responsible for corrective action: Nicole Rasmussen, Executive Director Planned completion date for corrective action plan: September 30, 2024.

Categories

Internal Control / Segregation of Duties Subrecipient Monitoring

Other Findings in this Audit

  • 976972 2023-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
10.558 Child and Adult Care Food Program $5.42M