Finding 514008 (2022-002)

Significant Deficiency Repeat Finding
Requirement
C
Questioned Costs
-
Year
2022
Accepted
2024-12-12
Audit: 332205
Organization: Respond INC (NJ)
Auditor: Marcum LLP

AI Summary

  • Core Issue: The Agency lacks an effective cash management plan, leading to late payments and uncollected receivables.
  • Impacted Requirements: Failure to meet statutory obligations due to inadequate monitoring of cash flow and budget projections.
  • Recommended Follow-Up: Formally adopt and regularly review a comprehensive cash management plan to ensure timely cash flow monitoring and compliance.

Finding Text

FINDING 2022-002 - CASH MANAGEMENT - TYPE: SIGNIFICANT DEFICIENCY - FEDERAL AND STATE OF NEW JERSEY AWARDS: ALL Criteria A cash management plan should be in place to monitor cash flow, current budget projections, debt covenants, and forecast future cash flows timely and accurately to meet statutory requirements. Condition The following instances were noted due to a lack of monitoring by the Agency of their cash flow levels timely and accurately: 1) Property taxes and utility payments are consistently paid late, resulting in penalties and accrued interest. 2) Uncollected accounts receivable balances are not monitored and followed up on for timely collection. 3) Significant outstanding checks on bank reconciliations were not timely followed up on. Cause Failure to monitor their cash flow and receivables, current budget projections, and forecast future cash flows timely and accurately. Effect Potential future and previous failure by the Agency to meet its obligations as they become due. Identification of a Repeat Finding This is a repeat finding from the immediate previous audit, 2021-02. Recommendation The Agency has implemented a plan to monitor cash flow, create more detailed budgets, and cash flow forecasts, but the plan should be formally adopted and reviewed with management consistently. The Agency has sold properties and cut expenses resulting in positive changes in net assets during 2022 and 2021. Prior to 2020, the Agency had experienced large net operating deficits. These prior year deficits and the noncompliance with statutory requirements have highlighted the need for an effective cash management plan. We recommend management develop and further refine its cash management plan to monitor cash flow and forecast future cash flows timely and accurately to prevent future noncompliance with statutory requirements and avoid unnecessary costs.  Views of Responsible Officials and Planned Corrective Actions The Agency has reviewed these findings and will strive to adhere to the suggested corrective action plan in this audit report. Additionally, management plans to continue to aggressively implement structural cost-saving measures throughout the Agency. Identification of a Repeat Finding This is a repeat finding from the immediate previous audit, 2021-02.

Corrective Action Plan

The Agency has reviewed these findings and will strive to adhere to the suggested corrective plan in this audit report. Additionally, management plans to continue to aggressively implement structural cost-saving measures throughout the Agency.

Categories

Subrecipient Monitoring Cash Management Reporting Significant Deficiency

Other Findings in this Audit

  • 514005 2022-001
    Material Weakness Repeat
  • 514006 2022-001
    Material Weakness Repeat
  • 514007 2022-001
    Material Weakness Repeat
  • 514009 2022-002
    Significant Deficiency Repeat
  • 514010 2022-002
    Significant Deficiency Repeat
  • 514011 2022-003
    Significant Deficiency Repeat
  • 514012 2022-003
    Significant Deficiency Repeat
  • 514013 2022-003
    Significant Deficiency Repeat
  • 1090447 2022-001
    Material Weakness Repeat
  • 1090448 2022-001
    Material Weakness Repeat
  • 1090449 2022-001
    Material Weakness Repeat
  • 1090450 2022-002
    Significant Deficiency Repeat
  • 1090451 2022-002
    Significant Deficiency Repeat
  • 1090452 2022-002
    Significant Deficiency Repeat
  • 1090453 2022-003
    Significant Deficiency Repeat
  • 1090454 2022-003
    Significant Deficiency Repeat
  • 1090455 2022-003
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
93.600 Head Start $419,421
10.558 Child and Adult Care Food Program $337,467
93.575 Child Care and Development Block Grant $279,134