Finding 554378 (2024-001)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2024
Accepted
2025-04-08
Audit: 353036
Organization: The Covering House (AZ)
Auditor: F E W CPAS

AI Summary

  • Core Issue: There is a significant deficiency in cash disbursement controls, with missing supporting documentation and approvals.
  • Impacted Requirements: Internal controls require evidence of approval and supporting invoices for all expenditures.
  • Recommended Follow-Up: Ensure all disbursements have invoices and are initialed by management for approval; new procedures are set for 2025.

Finding Text

Condition: We identified a significant deficiency related to the Organization’s controls over cash disbursements. Specifically, not all cash disbursements maintained the required supporting documentation and documented approval. Criteria: Proper internal control calls for every expenditure to show some evidence that it was approved prior to preparing the check and that invoices are present to support expenditures. Effect: The lack of these controls increases the risk of unauthorized or improper transactions, which could result in financial misstatements or misappropriation of assets. Recommendation: We recommend that the Organization obtain invoices or receipts for all disbursements and that all disbursements get initialed by a member of management to show evidence of approval. Response: The Organization is in agreement with the finding and has implemented new bill paying procedures that they will continue in 2025.

Corrective Action Plan

The Organization agrees with this finding and will implement the following: Separation of accounting functions: Review accounting staff functions and reassign duties to ensure that the same individual is not performing the bank reconciliations, preparing deposits, and issuing checks. Internal review process: Implement management review and documented approval of bank reconciliations and statements. Implement management review and documented approval of deposits.

Categories

Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 554379 2024-002
    Significant Deficiency
  • 1130820 2024-001
    Significant Deficiency
  • 1130821 2024-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.20M