Finding 502907 (2024-001)

FINDING 2024-001: UNCONDITIONAL AND CONDITIONAL PROMISES TO GIVE Condition and Criteria: During the current year audit, we discovered an unconditional promise to give awarded prior to year-end that was not properly accrued as a receivable and revenue. Additionally, we discovered a conditional promise to give, in which the underlying conditions of the award had not been met prior to year-end, had been improperly accrued as a receivable and revenue. Per ASC 958-605-25-8, unconditional promises to give shall be recognized as revenue when the promise is received. Per ASC 958-605-25-11, conditional promises to give shall be recognized as revenue when the condition or conditions on which they depend are substantially met. Cause: Internal controls were not in place to recognize unconditional and conditional promises to give in accordance with U.S. generally accepted accounting principles. Effect: Assets and net assets were overstated by $205,000. This deficiency has the potential effect of overstating or understating resources available to the Organization. Recommendation: We recommend the Organization implement procedures, such as the use of a check list, that can be attached to all major promises to give to ensure proper reporting in accordance with U.S. generally accepted accounting principles. This checklist could include items such as the name of the resource provider, the date the promise to give was received, corresponding payment schedule for multi-year promises to give, whether or not there are any conditions related to the underlying promise to give, and mechanisms for tracking any conditions such as the nature of the underlying condition and when conditions must be satisfied.