Finding Text
Criteria: Management is responsible for the design, implementation and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Condition and Content: Management has not implemented a complete system of internal controls that helps prevent material misstatements from being prevented or detected and identified. During our audit, we identified certain material misstatements such as errors in grant expense accruals, property and equipment, deferred revenues and leases, as well as a lack of segregation of duties around cash.
Cause: Controls were not adequately designed.
Repeat Finding: N/A
Recommendation: We recommend the Organization complete a robust review of the entity’s financial statements and internal control environment to ensure that key controls are properly designed to support the preparation of timely and accurate financial statements including consideration of the skills, knowledge and expertise and time needed to prepare financial statements in conformity with U.S. GAAP. Management should timely post accounting entries and reconcile accounts to ensure financial statements are accurate. Management should also implement a month-end close process to ensure all required journal entries are posted and reviewed, and financial statements are prepared and reviewed. Further, we recommend management review segregation of duties around cash, payroll, bank and balance sheet reconciliations.
Management’s Response: Management agrees with the finding. Management plans to complete a review of resources assigned to accounting and finance departments as well as identify and implement sufficient internal controls over financial reporting.