Finding 524186 (2024-001)

2024-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2023 - 05/31/2024 10CH010945-05 and Human Services Early Head Start U.S. Department of Health 07/01/2023 - 06/30/2024 Child Care Partnerships and Human Services 10HP000422-04 Condition: At the time of audit fieldwork, Umatilla-Morrow Head Start, Inc. had not reconciled all account balances. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to contributions receivable, grants receivable, refundable advance, accrued liabilities, operating right of use assets and lease obligations, property and equipment, grant revenue, in-kind, and net assets with donor restrictions. As Umatilla-Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit, a material weakness exists in Umatilla-Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla-Morrow Head Start, Inc. experienced turnover in its business office which contributed to the lack of timely reconciliations, review of reconciliations performed, and subsequent adjustments to account balances. Repeat: Yes - Years as repeat finding: Five 2023-001 Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.