FAC Explorer

Finding 447604 (2022-002)

Material Weakness Repeat Finding
Requirement
AN
Questioned Costs
-
Year
2022
Accepted
2023-07-19
Audit: 313186
Organization: Southeast Arkansas Community Action Corporation (AR)
Auditor: Searcy & Associates

AI Summary

  • Core Issue: Management failed to reconcile accounts properly, leading to material audit adjustments.
  • Impacted Requirements: Insufficient internal controls over financial reporting resulted in reliance on auditors for necessary entries.
  • Recommended Follow-Up: Improve internal controls, document accounting procedures, and provide training on the general ledger system.

Finding Text

Material adjustmentsCriteria: Management is responsible for reconciling the accounts at the end of the year.Condition: Insufficient internal controls over financial reporting. Material audit adjustments were required to prevent the entity?s financial statements from being materially misstated.Cause: The entity relied on auditors to propose entries after audit procedures.Effect: Some audit adjustments were due to personnel inexperience with the entity?s general ledger system.Recommendation: The entity needs to improve internal controls to prevent these kinds of adjustments. The entity should document which accounting procedures are needed to be completed on a recurring basis to detect material adjustments. The auditor will work with the entity to make personnel more knowledgeable about its responsibility for the financial statements. The auditor also noted recommends the entity aquire additional training on the entity?s general ledger system.

Corrective Action Plan

Southeast Arkansas Community Action Corporation has hired a new accounting staff, finance director, and executive director. These members of our staff were hired in the latter part of 2021 and early part of 2022. This staff is dedicated to financial clarity and is working diligently to move toward ensuring accounting procedures that need to be completed on a recurring basis are done based on G.A.A.P. The staff will also be working closely with the auditor. The accounting staff and finance director will attend training in August 2023

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 447603 2022-001
    Material Weakness Repeat
  • 447605 2022-001
    Material Weakness Repeat
  • 447606 2022-002
    Material Weakness Repeat
  • 1024045 2022-001
    Material Weakness Repeat
  • 1024046 2022-002
    Material Weakness Repeat
  • 1024047 2022-001
    Material Weakness Repeat
  • 1024048 2022-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.568 Low-Income Home Energy Assistance $1.34M
93.569 Community Services Block Grant $428,172
10.568 Emergency Food Assistance Program (administrative Costs) $33,699