Finding Text
Finding 2023-003--General Oversight--Significant Deficiency
Condition: During the year ended December 31, 2023, the Organization fell behind on vouchering and billing of grants as well as a delay in financial reporting due to lack of oversight of the contracted accounting services. This was identified as a Material Weakness in the December 31, 2022 audit.
Criteria: A system of internal controls should be in place, including policies and procedures to ensure that maintenance of detail documentation, provide reasonable assurance transactions are recorded properly, and misstatements are prevented or detected in a timely manner. Management should provide oversight to ensure that the system of controls is being followed.
Cause: The Organization relied too heavily on its contracted accounting service and did not provide adequate management oversight in the financial reporting process.
Effect: The condition could allow improper recording of program expenses and revenues. For transactions related to federal grants, without proper documentation, costs may be disallowed.
Recommendation: We recommend that the Organization create policies and procedures to ensure proper oversight of the financial reporting function. In addition, we would recommend the Organization to consider the costs and benefits of restructuring the finance department. This could include allocating additional resources to hire additional employees, reallocation of responsibilities within the organization and less reliance on the contracted accounting services.