Finding 41498 (2022-002)

2022-002 Material Weakness 93.558 Criteria 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal controls. The objectives of internal control over compliance as found in 2 CFR section 200.1, are to ensure that transactions are properly recorded and accounted for in order to permit the preparation of reliable financial statements and federal reports. Condition As a result of our audit procedures in relation to the audit of the financial statements it was determined that amounts reported in the prior year on the schedule of expenditures of federal awards was understated by $433,027. A restatement of the prior period was required in the financial statements. Context The Organization has experienced high turnover in its fiscal department. Cause Due to turn over in the fiscal department grant claims for reimbursements of expenses incurred in accordance with grant agreements were not submitted timely or recorded in the period the conditions of the grant were met. Effect The Schedule of Expenditures of Federal Awards was materially misstated in the prior year. Recommendations We recommend that documented accounting procedures establish clear guidelines for revenue recognition and that monitoring be performed by management to ensure that grant claims are submitted timely. We also recommend that monthly reconciliations of revenue to expenditures be performed monthly and reviewed by management to ensure that expenditures of federal awards are complete and accurate.