FAC Explorer

Finding 40097 (2022-001)

Significant Deficiency
Requirement
C
Questioned Costs
-
Year
2022
Accepted
2023-03-28
Audit: 45742
Organization: Advanced Functional Fabrics of America, Inc. (MA)
Auditor: Aafcpas INC

AI Summary

  • Core Issue: AFFOA failed to record $1,132 in expenses in the correct fiscal year due to internal control weaknesses from finance department turnover.
  • Impacted Requirements: Compliance with Government Auditing Standards for accurate year-end transaction recording is at risk.
  • Recommended Follow-Up: Implement policies for monitoring year-end transactions and enhance training to ensure timely submission of expense reports.

Finding Text

Significant Deficiency: Finding 2022-001 Information on the Federal program: The finding relates to Federal funds received from the U.S Department of Defense, for fiscal year 2022, under the Research and Development Cluster, Assistance Listing Number 12.630, relating to cost principles compliance requirement. Criteria: Government Auditing Standards require agencies to have internal controls in place to ensure all transactions are properly recorded in the correct year. Condition: During our testing of twenty-five cash disbursement transactions, we noted three instances totaling $1,132 that AFFOA did not record the expenses in their proper year. Cause: During fiscal year 2022, AFFOA experienced turnover within their finance department. Accordingly, AFFOA?s internal controls and processes were not performed in a timely manner. Questioned Costs: None Recommendation: AFFOA should develop and implement policies and controls for monitoring year-end transactions as well as funding from the Federal and state governments to identify, document and track accurate expenditures for each year. The development and utilization of these controls and polices will reduce the risk of noncompliance as well as the risk that financial statements could be materially misstated. Repeated finding: No Management?s Response: We concur with the recommendation, particularly as it pertains to credit card transactions. During the current fiscal year, we have increased training and provide weekly reminders to all AFFOA employees that expense reports, including those related to credit card purchases, are to be submitted to accounting in a timely manner (within 30 days of travel). In addition, we are reconciling the ?Clearing? account monthly. This account bridges the credit card payments and the employees? expense reports. With a monthly reconciliation of this account, we are better able to follow up with employees with overdue expense reports, and we will have a precise basis for any necessary accruals related to credit card purchases at year-end.

Corrective Action Plan

3/28/2023 Board of Directors of Advanced Functional Fabrics of America, Inc.: Advanced Functional Fabrics of America, Inc. respectfully submits the following corrective action plan for the year ended June 30, 2022. Name and address of independent public accounting firm: AAFCPAs 160 Federal St. 16th floor Boston, MA 02110 Audit period: July 1, 2021 ? June 30, 2022 The findings from the June 30, 2022, 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 FINDINGS SIGNIFICANT DEFICIENCY 20X2-001 Recommendation: AFFOA should develop and implement policies and controls for monitoring year end transactions as well as funding from the Federal and state governments to identify, document and track accurate expenditures for each year. Action Taken: We concur with the recommendation, particularly as it pertains to credit card transactions. During the current fiscal year, we have increased training and provide weekly reminders to all AFFOA employees that expense reports, including those related to credit card purchases, are to be submitted to Accounting in a timely manner (within 30 days of travel). In addition, we are reconciling the ?Clearing? account monthly. This account bridges the credit card payments and the employees? expense reports. With a monthly reconciliation of this account, we are better able to follow up with employees with overdue expense reports, and we will have a precise basis for any necessary accruals related to credit card purchases at year-end. If the Board has questions regarding this plan, please call Don Nadreau, CFO, at 603-702-3639. Sincerely yours, Don Nadreau, Chief Financial Officer

Categories

Procurement, Suspension & Debarment Subrecipient Monitoring Allowable Costs / Cost Principles Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 616539 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
12.630 Basic, Applied, and Advanced Research in Science and Engineering $19.12M