Finding Text
Finding is for the following federal award
Federal Assistance Listing Number Program Name Expenditures
93.569 Community Service Block Grant $ 374,651
Type of Compliance Requirement: Other
Finding 2023-002: Internal Control Over Financial Reporting – Insufficient Review of Accounting Records -
Significant Deficiency
Criteria:
Internal control over financial reporting requires that personnel with adequate skill, knowledge and experience in
Nonprofit accounting and financial reporting oversee the maintenance of an entity's general ledger accounting
system, subsidiary records, and external financial reporting processes.
Condition:
Community Action of Napa Valley‘s internal controls were not operating as designed to detect material
misstatements in accounting records, including estimates before submission of financial information for audit.
Context:
The accounting records are maintained using MIP general ledger accounting system. Cash receipts and cash
disbursements are entered into the MIP general ledger system from source documents, and the bank accounts are
reconciled monthly to the system cash balances.
However, MIP accounts were not updated for accrued unemployment payable as required by generally accepted
accounting principles for nonprofits using the accrual basis of accounting. There were other observations including
unreconciled trial balance to prior audit report, omission of construction in progress and revenue recognition from
restriction once condition was met or matching expense incurred.
Effect:
The effect of the internal controls not operating as designed was that the organization’s normal closing and
balancing of its accounts was not in accordance with generally accepted governmental accounting practices. The
impact was that some account balances were not accurate and reliable and hindered the timely preparation of both
internal and external financial reports
Cause:
The cause, the auditor’s judgment, was turnover of the financial management staff with adequate skill, knowledge
and experience to maintain the organization’s general ledger accounting system, reconciling the account
balances on a regular basis, and preparing its annual financial statements.
Recommendation:
We recommend Community Action of Napa Valley reconcile all assets, liability, and net asset accounts to
supporting schedules and documentation each month.
Views of Responsible Officials and Corrective Actions:
Community Action of Napa Valley records all accounting records. This year was unique due to a big capital
purchase. We sent the journal entries to the auditor to review before posting in the GL. We were missing entries
due to lack of support we received from the auditor during her departure from the organization. We have a
process for year end closing to make sure all the entries are sufficiently entered.