Finding 504145 (2022-002)

Significant Deficiency Repeat Finding
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2024-10-30

AI Summary

  • Core Issue: The Association failed to perform bank reconciliations accurately and on time, leading to significant internal control deficiencies.
  • Impacted Requirements: This violates HHS guidelines requiring effective financial systems for grant accountability.
  • Recommended Follow-Up: The Association should adhere to its documented procedures to ensure timely and accurate bank reconciliations moving forward.

Finding Text

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. This internal control deficiency is considered to be a significant deficiency. Context: Procedures included examining bank reconciliation reports for the December 2022 period. Bank reconciliations were reviewed for unusual transactions, large reconciling items, and a sample of transactions was traced to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. This continued throughout the 2022 fiscal year. Additionally, the reconciliation for the general checking account was changed/updated after receipt of the initial trial balance for the 2022 audit, indicating the bank reconciliations are still not being accurately or timely completed. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from prior fiscal years. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number was 2021-002. Recommendation: The Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Corrective Action Plan

Recommendation: The Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to the finding: Containment Through this audit process and staff turnover, tasks have been separated and processes have been implemented immediately to meet the expectations that all transactions are entered into the fiscal system within a timely manner of one week or sooner. Also, immediately the AR data entry process was established and the fiscal staff were trained on this procedure. Root Cause Due to a lack of knowledge of the new software system. Not all information was migrated into the new software system in a timely manner, making it difficult to use at its full potential. OCCDA had a large turnover in the fiscal team during the audit processing, making it difficult to find information or pull reports that were not fully migrated. The transition to the new fiscal software was during the height of the COVID-19 pandemic, making it difficult to complete training and migration of the new system. Action Taken In 2023, newly hired staff established a clear understanding of the naming conventions for clarity and accurate reporting. The fiscal team has assigned tasks ensuring duties are covered and responsibilities are defined. This will ensure that all fiscal tasks are completed timely and accurately. Training has been provided for the fiscal team on the internal processes and procedures. Journal entries have been minimized, and detailed entry of all transactions is the preferred method to allow for detailed review. Review from not only the fiscal staff but also the leadership team when completing their monthly reviews ensures accuracy and checks and balances. In 2023 the fiscal team has completed timely data entry of all transactions and in 2024 there will be timely bank reconciliations. Moving forward these regular and timely reconciliations as well as continued detailed entries will allow for simple and accurate monthly bank reconciliations and ensure timely detection of errors. Bank reconciliations have been completed on a timely basis each month no later than the 15th for the prior month since. This is a continued practice and reconciliation will continue to be current for all accounts. Journal entries continue to be minimized and detailed entry of all transactions are the preferred method of entry. Separation of duties continues to be a practice, with the Fiscal Assistant completing the entries into the fiscal software and the Fiscal Manager reviewing the data entry before payments are processed. Name(s) of contact person(s) responsible for corrective action: Fiscal Manager Planned completion date for corrective action plan: March 2024 (Q1)

Categories

Internal Control / Segregation of Duties Significant Deficiency

Other Findings in this Audit

  • 504141 2022-001
    Material Weakness Repeat
  • 504142 2022-007
    Significant Deficiency Repeat
  • 504143 2022-008
    Significant Deficiency
  • 504144 2022-009
    Significant Deficiency
  • 504146 2022-003
    Significant Deficiency Repeat
  • 504147 2022-004
    Significant Deficiency
  • 504148 2022-005
    Significant Deficiency
  • 504149 2022-006
    Significant Deficiency
  • 504150 2022-001
    Material Weakness Repeat
  • 504151 2022-007
    Significant Deficiency Repeat
  • 504152 2022-008
    Significant Deficiency
  • 504153 2022-009
    Significant Deficiency
  • 504154 2022-002
    Significant Deficiency Repeat
  • 504155 2022-003
    Significant Deficiency Repeat
  • 504156 2022-004
    Significant Deficiency
  • 504157 2022-005
    Significant Deficiency
  • 504158 2022-006
    Significant Deficiency
  • 504159 2022-001
    Material Weakness Repeat
  • 504160 2022-007
    Significant Deficiency Repeat
  • 504161 2022-008
    Significant Deficiency
  • 504162 2022-009
    Significant Deficiency
  • 504163 2022-002
    Significant Deficiency Repeat
  • 504164 2022-003
    Significant Deficiency Repeat
  • 504165 2022-004
    Significant Deficiency
  • 504166 2022-005
    Significant Deficiency
  • 504167 2022-006
    Significant Deficiency
  • 1080583 2022-001
    Material Weakness Repeat
  • 1080584 2022-007
    Significant Deficiency Repeat
  • 1080585 2022-008
    Significant Deficiency
  • 1080586 2022-009
    Significant Deficiency
  • 1080587 2022-002
    Significant Deficiency Repeat
  • 1080588 2022-003
    Significant Deficiency Repeat
  • 1080589 2022-004
    Significant Deficiency
  • 1080590 2022-005
    Significant Deficiency
  • 1080591 2022-006
    Significant Deficiency
  • 1080592 2022-001
    Material Weakness Repeat
  • 1080593 2022-007
    Significant Deficiency Repeat
  • 1080594 2022-008
    Significant Deficiency
  • 1080595 2022-009
    Significant Deficiency
  • 1080596 2022-002
    Significant Deficiency Repeat
  • 1080597 2022-003
    Significant Deficiency Repeat
  • 1080598 2022-004
    Significant Deficiency
  • 1080599 2022-005
    Significant Deficiency
  • 1080600 2022-006
    Significant Deficiency
  • 1080601 2022-001
    Material Weakness Repeat
  • 1080602 2022-007
    Significant Deficiency Repeat
  • 1080603 2022-008
    Significant Deficiency
  • 1080604 2022-009
    Significant Deficiency
  • 1080605 2022-002
    Significant Deficiency Repeat
  • 1080606 2022-003
    Significant Deficiency Repeat
  • 1080607 2022-004
    Significant Deficiency
  • 1080608 2022-005
    Significant Deficiency
  • 1080609 2022-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.870 Maternal, Infant and Early Childhood Homevisiting Grant Program $107,617
93.600 Head Start $107,048
93.590 Community-Based Child Abuse Prevention Grants $28,710
10.558 Child and Adult Care Food Program $17,968