Finding Text
Section III – Federal Award Findings and Questioned Costs
Finding Number 2019-001: Represents a material weakness in internal control over compliance with Community and Family Services, Inc.'s major federal programs.
Repeat Finding: No
Questioned Costs: None
Funding Agency: Department of Housing and Urban Development & Department of Health and Human Services Title: Section 8 and Head Start
AL Numbers: 14.871 & 93.600
Award Year: Section 8: 01/01/19 - 12/31/19 Head Start: 11/1/2018 - 10/31/2019 Head Start: 11/1/2019 - 10/31/2020 condition - Throughout the course of the audit, Wipfli, LLP. noted that several significant accounts were not reconciled in an accurate or timely manner. As a result, material adjusting journal entries needed to be posted to the general ledger to accurately report account balances. Specifically, Wipfli LLP. proposed seven material journal entries including a prior period adjustment which changed grants receivable, inventory, property and equipment, deferred revenue, net assets, grant revenue and various expense accounts totaling $1,077,141. In addition, Wipfli,LLP prepared the financial statements due to management's inability to provide financial statements in accordance with generally accepted accounting principles generally accepted in the United States (GAAP).
Criteria - Management is responsible for designing and implementing fiscal policies and procedures that result in accurate account balances that can be used to prepare financial statements. Management is also responsible for establishing and maintaining internal controls and for the fair presentation of the financial statements including the related disclosures, in conformity with GAAP.
Effect or Potential Effects - As a result of the material adjusting journal entries and Wipfli, LLP preparing the financial statements, the Organization has a material weakness in internal control and compliance over financial reporting.
Cause - The Organization has had turnover and has limited staff working in the accounting office.
Auditor's Recommendation - We recommend that the Organization strengthen their controls around year end close reporting. Management should review and reconcile all statement of financial position accounts at least annually. Management should continue to review and approve the annual financial statements and the related footnote disclosures.
View of Responsible Official - The Organization agrees with the finding and will investigate if this can be addressed internally by management.