Finding 570521 (2023-001)

Material Weakness
Requirement
CL
Questioned Costs
$1
Year
2023
Accepted
2025-07-07
Audit: 361514
Organization: Codeva, Inc. (VA)
Auditor: Keiter

AI Summary

  • Core Issue: The Organization lacks sufficient procedures for GAAP-compliant accounting, particularly regarding cutoff accruals and unearned revenue.
  • Impacted Requirements: Proper controls, personnel, and oversight are needed to ensure effective financial reporting and compliance with GAAP.
  • Recommended Follow-Up: Re-evaluate accounting procedures, implement additional review processes, and provide staff training on accruals and financial policies.

Finding Text

Condition: During the audit, it became apparent that there were insufficient procedures in place to ensure GAAP-compliant accounting and financial reporting, primarily around cutoff accruals and unearned revenue. Criteria: The Organization should have proper controls, personnel, and oversight in place to produce an effective control environment related to GAAP-basis accounting and financial reporting. Cause: The Organization does not have proper controls related to recording, review, and oversight of the financial accounting and reporting functions. Effect: Several adjusting entries were identified during the audit in order to present GAAP-basis financial statements. Recommendation: The Organization should re-evaluate its current procedures for its accounting and reporting functions pertaining to accruals and restricted net asset classifications and appropriately address any deficiencies. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees will take the following actions to implement additional review and oversight procedures in its financial policies: • Reconcile accounts and identify receipts and expenses where accruals are needed. • Create documentation for month-end and year-end closing requirements. • Review receipts monthly to ensure all restricted funds are identified and classified properly in the Organization’s accounting system. • Update the Organization’s financial policies to reflect the established changes. • Process any necessary entries to adjust accounts accordingly. • Conduct internal training to bring awareness to staff of the necessity of accruals and project charging and tracking.

Corrective Action Plan

The Organization has engaged a management consulting firm with expertise in financial accounting and reporting to implement additional review and oversight procedures in its financial policies.

Categories

Questioned Costs Internal Control / Segregation of Duties Reporting

Other Findings in this Audit

  • 570522 2023-002
    Material Weakness
  • 570523 2023-003
    Material Weakness
  • 570524 2023-004
    Material Weakness
  • 570525 2023-001
    Material Weakness
  • 570526 2023-002
    Material Weakness
  • 570527 2023-003
    Material Weakness
  • 570528 2023-004
    Material Weakness
  • 570529 2023-001
    Material Weakness
  • 570530 2023-002
    Material Weakness
  • 570531 2023-003
    Material Weakness
  • 570532 2023-004
    Material Weakness
  • 1146963 2023-001
    Material Weakness
  • 1146964 2023-002
    Material Weakness
  • 1146965 2023-003
    Material Weakness
  • 1146966 2023-004
    Material Weakness
  • 1146967 2023-001
    Material Weakness
  • 1146968 2023-002
    Material Weakness
  • 1146969 2023-003
    Material Weakness
  • 1146970 2023-004
    Material Weakness
  • 1146971 2023-001
    Material Weakness
  • 1146972 2023-002
    Material Weakness
  • 1146973 2023-003
    Material Weakness
  • 1146974 2023-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
47.076 Stem Education (formerly Education and Human Resources) $332,613
47.070 Computer and Information Science and Engineering $96,436