Identifying Number: 2024-001
Finding: Current management noted that the audited financial statements as of and for the year ended June 30, 2023, were materially misstated for certain contribution transactions recorded in error in the amount of $7,997,654. Those errors were corrected and recorded in fiscal year 2024, which is not in accordance with U.S. GAAP.
Corrective Actions Taken or Planned:
The entire finance team was new in FY24. During an internal review, management identified that certain revenue transactions had been recorded incorrectly in the prior fiscal year (FY23), resulting in a materially misstated ending balance for FY23 and, consequently, an inaccurate beginning balance for FY24. Because FY23 had already been closed and audited, the necessary corrections were recorded in FY24.
Management proactively informed the new auditors of these adjustments. Due to the materiality of the correction, the auditors determined that the FY23 ending balance needed to be reinstated. As a result, they expanded their scope to include a re-audit of FY23 to ensure the accuracy of the reinstated balances, which extended the overall audit timeline.
It’s important to emphasize that this finding was self-identified and communicated by management, and the correction was properly recorded in FY24. No further corrective action is required for FY25. Throughout FY24, the finance team has worked diligently to strengthen internal policies, processes, controls, and systems, which contributed to a clean audit result for FY24. This finding relates solely to FY23 and does not reflect the current state of financial management.
Name of Responsible Person: Manizha Nabieva, CFO
Projected Date of Completion: 05/28/2025
Identifying Number: 2024-002
Finding: Federation of American Scientists’ fiscal year 2024 data collection form was not submitted within nine months after the end of the audit period.
Corrective Actions Taken or Planned:
The delay in filing the data collection form was directly related to the delay in finalizing the audit, as noted in the first finding above. Since this was our first year working with RSM, the audit scope expanded significantly due to the reinstatement of beginning balances. The auditors required additional time to ensure the accuracy of the financial statements before issuing their final report.
We will finalize and submit the data collection form as soon as the audit is complete, but no later than May 28, 2025. To prevent similar delays in the future, we have already initiated discussions with our auditors regarding the FY25 audit and plan to begin the audit process in October 2025.
Name of Responsible Person: Manizha Nabieva, CFO
Projected Date of Completion: 5/28/2025