Finding Text
2024-001 - Lack of Proper Review of the Financial Statements Resulting in Incorrect Allocation
Methodology Used on the Statement of Functional Expenses
Type of Finding:
• Material Weakness in Internal Control over Financial Reporting
Condition: Subsequent to the original issuance of the audited financial statements on April 30, 2025,
IMEC management identified that the methodology used to allocate expenses on these statement of
functional expenses was incorrect.
Criteria or Specific Requirement: Per 2 CFR Part 200, Subpart F-Audit Requirements and Generally
Accepted Accounting Principles (GAAP), nonprofit organizations are required to present expenses by
both natural and functional classification in a manner that accurately reflects IMEC's operations.
Additionally, internal control standards under GAGAS require that financial statements be subject to
adequate review to ensure accuracy and compliance with applicable standards prior to issuance.
Cause: The error occurred due to a lack of sufficient internal controls over the financial statement
review process.
Effect: This increases the risk of material omissions or other errors in financial statements and
accompanying disclosures.
Repeat Finding: No
Recommendation: Management should implement a formalized financial statement review process