Finding 481364 (2023-002)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2024-08-16
Audit: 317399
Organization: Community Action of Napa Valley (CA)

AI Summary

  • Core Issue: Community Action of Napa Valley lacks effective internal controls over financial reporting, leading to inaccurate accounting records.
  • Impacted Requirements: Compliance with generally accepted accounting principles (GAAP) is compromised, affecting the reliability of financial reports.
  • Recommended Follow-Up: Monthly reconciliation of all asset, liability, and net asset accounts is essential to ensure accuracy and compliance.

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.

Categories

Procurement, Suspension & Debarment Reporting Significant Deficiency Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 481359 2023-001
    Material Weakness
  • 481360 2023-001
    Material Weakness
  • 481361 2023-001
    Material Weakness
  • 481362 2023-002
    Significant Deficiency
  • 481363 2023-002
    Significant Deficiency
  • 1057801 2023-001
    Material Weakness
  • 1057802 2023-001
    Material Weakness
  • 1057803 2023-001
    Material Weakness
  • 1057804 2023-002
    Significant Deficiency
  • 1057805 2023-002
    Significant Deficiency
  • 1057806 2023-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $353,722
93.569 Community Services Block Grant $202,166
93.596 Child Care Mandatory and Matching Funds of the Child Care and Development Fund $112,803
10.558 Child and Adult Care Food Program $54,885
93.575 Child Care and Development Block Grant $51,855
97.024 Emergency Food and Shelter National Board Program $50,000
14.231 Emergency Solutions Grant Program $40,171
10.568 Emergency Food Assistance Program (administrative Costs) $37,313
93.053 Nutrition Services Incentive Program $1,061