Finding Text
Reference Number: 2023-002 – Delays in Financial Reporting
Type of Finding: Material Weakness in Internal Control over Financial Reporting; Instance of Noncompliance
Criteria
In accordance with Title 45 U.S. Code of Federal Regulations (CFR) Part 75 Subpart F, recipients that spend a total of $750,000 or more in federal funds during their fiscal year are subject to Single Audit requirements and the audit must be completed and the Data Collection Form and reporting package submitted to the Federal Audit Clearinghouse within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period.
Condition
The Organization has experienced significant delays in the preparation and issuance of the 2023 financial statements and its Single Audit under Uniform Guidance.
Cause
The Organization has experienced significant turnover in key personnel in the Organization’s finance department and management in past years. Absent robust accounting policies and procedures, when vacancies occur, information can be lost and as individuals are getting up to speed, some processes may not be fully executed if they are manual and not fully embedded into an automated system.
Effect
Delays in processing year-end closing procedures caused the financial statement issuance to be delayed. In addition, the Organization is neither in compliance with Uniform Guidance nor any grant agreements that require annual audited financial statements.
Recommendation
We recommend that the Organization develop and document processes to systematically identify and track all federal funds to ensure timely provision of a Single Audit. Key actions to be included in this plan should encompass enhanced training and awareness initiatives, the establishment of internal review procedures, and the implementation of ongoing monitoring and oversight mechanisms.
Views of Responsible Officials and Planned Corrective Action
Person responsible: Leona Smith Di Faustino, Interim Executive Director
Corrective Action Plan: The Organization had a significant turnover in both Fiscal Manager Consultant and Executive Director during the year being audited. The Fiscal Manager Consultant was replaced by the Director of Finance in the later part of the fiscal year 2022-2023. This required the new Director of Finance to create and implement as many internal controls that were needed, that were not implemented, and/or recommended by our current CPA firm who had been previously auditing prior years. Additionally, our Director of Finance has engaged the Board of Directors in taking a more active role in the financial statement overview that was not previously recommended to them by our CPA firm.
Anticipated Implementation Date: June 30, 2024