Finding 565134 (2023-003)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2025-06-17
Audit: 359065
Organization: The Baltimore Station, Inc. (MD)

AI Summary

  • Core Issue: The Station lacks proper documentation and controls for tracking restricted revenue, risking incorrect financial reporting.
  • Impacted Requirements: Internal controls for recognizing restricted contributions and ensuring compliance with restrictions are not being met.
  • Recommended Follow-Up: Implement a continuous accounting process to track and analyze restricted revenue and expenditures for accurate general ledger entries.

Finding Text

Internal Control Material Weakness – Restricted Revenue Recognition Criteria: Management is responsible for implementing proper internal controls surrounding restricted revenue recognition to ensure restricted contributions and satisfaction of restrictions are properly reflected in the general ledger. Condition: During our audit, we noted the Station failed to maintain proper supporting documentation for restricted funding and satisfaction of such restrictions. Cause: The Station did not have adequate internal controls in effect during the year to track restricted funding and events satisfying the restrictions. could lead to improper revenue recognition within the financial statements. Recommendation: We recommend the Station implement an accounting process whereby all restricted revenue and corresponding expenditures that satisfy restrictions are maintained and analyzed on a continuous basis that allows for proper recording in the general ledger. Management's Response: See Corrective Action Plan

Corrective Action Plan

Corrective Action Plan: 1. Proper identification and segregation of restricted revenue: Created spreadsheet that tracks restricted revenue, expenses, and balance remaining for each fund or restriction. This helps with both internal and external reporting requirements. 2. Matching Expenditures to Restrictions: As expenditures related to restricted funds are incurred (e.g., paying for program services or project costs), ensure these expenses are recorded against the same fund or tracking code used for the revenue. This ensures that all expenditures meet the requirements of the restriction and provides proper documentation for audit purposes. 3. Continuous monitoring and analysis to ensure accurate recording in the general ledger: Restricted funding will be reviewed at monthly Development meetings to ensure that revenue and expenses are appropriately recorded and that the remaining balance matches the restrictions. 4. Regular reviews and reconciliation of restricted funds to ensure compliance with restrictions. 5. Clear reporting to stakeholders and proper disclosure in financial statements. Anticipated completion date: 1. Completed 2. Ongoing 3. Starting February 10, 2025 4. Ongoing 5. Ongoing

Categories

Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
64.024 Va Homeless Providers Grant and Per Diem Program $1.19M
64.024 Va Safe Haven Program $142,876
14.231 Emergency Solutions Grant Program $111,591
64.024 Va Capital Grant $85,566