Finding Text
Item # 2024-01 Inadequate Internal Controls over the recognition of revenue (Material Weakness in Internal Control over Financial Reporting)
Criteria: Under U.S. Generally Accepted Accounting Standards, revenue for conditional, cost reimbursement grants is recognized when the related expenditures are incurred.
Condition: Based on the results of our audit testing, we noted two material grant billings that were not recorded in the period the expenditures were incurred and were instead recorded when invoiced.
Cause: Internal controls failed to detect misstatements in revenue during the year June 30, 2024.
Effect: The effect of the condition was an adjustment to increase revenue (and the related by receivable) by $372,638, which was recorded in the June 30, 2024 consolidated financial statements.
Auditor’s Recommendation: Management should perform a thorough analysis of revenue around fiscal year end to ensure revenue is recorded properly.
Views of Responsible Officials and Planned Corrective Actions: Management understands that additional oversight and review of revenue recognition is necessary. Controls will be put into place to prevent revenue recognition issues