Finding 517187 (2023-001)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2024-12-30
Audit: 335142
Auditor: Frankel LLC

AI Summary

  • Core Issue: The Club faced major challenges with the new general ledger software, leading to delays and inaccuracies in financial reporting.
  • Impacted Requirements: Timely and accurate recording of transactions and monthly bank reconciliations were not met, affecting the reliability of financial statements.
  • Recommended Follow-Up: Review the Corrective Action Plan to address software implementation issues and ensure proper resources are allocated for ongoing accounting functions.

Finding Text

Criteria: Maintenance of the general ledger is critical to accurate and reliable financial reporting. Condition: The Club implemented a new general ledger software system in May 2023 and experienced significant difficulties in transferring beginning balances, entering current transactions timely and accurately, as well as reconciling key accounts. In particular, after the implementation, monthly bank account reconciliations were not completed until late 2024. Cause: The Club was not prepared to implement the new software and did not have adequate resources to deal with the difficulties encountered and routine accounting functions. Effect: The Club had significant unrecorded or improperly recorded transactions in the general ledger which resulted in a significant adjustment to the cash account balance and other accounts that were material to the financial statements. Response: See Corrective Action Plan.

Corrective Action Plan

Action(s) Taken or Planned on the Finding: Our plan to correct the general ledger system and accurately account for transactions going forward is as follows: 1.) Hire an experienced Chief Financial Officer to implement best practices within the organization’s accounting function. 2.) Develop processes to ensure that significant balance sheet accounts, including cash, investments, and receivables, are reviewed and reconciled each month. 3.) Hire a general ledger specialist whose primary focus will be on accounting for and reconciling receivable balances. These steps will allow us to account for transactions accurately and report correct financial statement balances. Anticipated Completion Date: The new Chief Financial Officer started September 30, 2024. The implementation of new processes and procedures will begin in December 2024 and once established will continue indefinitely. The hiring process for the additional staff is expected to commence in December 2024.

Categories

Reporting

Other Findings in this Audit

  • 517188 2023-002
    Significant Deficiency
  • 1093629 2023-001
    Material Weakness
  • 1093630 2023-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.287 Twenty-First Century Community Learning Centers $570,809
10.558 Child and Adult Care Food Program $91,180
16.738 Edward Byrne Memorial Justice Assistance Grant Program $61,192
16.726 Juvenile Mentoring Program $56,863
10.559 Summer Food Service Program for Children $27,226