Finding Text
Finding is for the following Federal Award
Federal Assistance Listing Numbers 47.076 & 43.000
Research and Development Cluster
Total amount $1,364,926
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:
Astronomical Society of the Pacific’s Finance Manager departed at the end of the fiscal year and the organization
replaced the Finance Manager with LTD Global to maintain certain components of its financial accounting and
reporting system.
Context:
The accounting records are maintained using a QuickBooks (QB) general ledger accounting system. Cash receipts
and cash disbursements are entered into the QB general ledger system using journal entries and not source
documents and related transactions, and the bank accounts are reconciled monthly to the system cash balances.
However, QB accounts were not updated for accounts receivable, prepayments, inventory, investments, accounts
payable andloan payable as required by generally accepted accounting principles for nonprofits using the accrual
basis of accounting. Inventory, investments and restricted net asset accounts had not been updated. There were
some relatively minor unexplained cash balances in the general ledger control accounts. Also, some source
documents supporting cash receipts could not be located.
Effect:
The effect was that the organization did not have controls and procedures in place to permit the normal closing and
balancing of its accounts 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, in my 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 Astronomical Society of the Pacific reconcile all assets, liability, and net asset accounts to
supporting schedules and documentation each month. After September 30, 2022, the Society hired LTD Global to
assist with this process.
Views of Responsible Officials and Corrective Actions:
Astronomical Society of the Pacific has retained an accounting firm LTD Global to review and revise our accounting
system to better conform to current accounting practices.