Finding Text
U.S. DEPARTMENT OF EDUCATION
PASSED THROUGH ARKANSAS PUBLIC SCHOOL RESOURCE CENTER
CHARTER SCHOOLS - AL NUMBER 84.282A
PASS-THROUGH NUMBER NOT AVAILABLE
AUDIT PERIOD - YEAR ENDED JUNE 30, 2024
2024-001. Internal control
The internal control deficiencies identified in Finding 2024-001 noted in Section II Financial Statement Findings apply to this major federal program. Financial statement finding 2024-001 detail below:
Criteria: Internal control is a process consisting of five interrelated components - control environment, risk assessment, information and communication, control activities, and monitoring. Management is responsible for adopting sound accounting policies and for establishing and maintaining internal control that will, among other things, initiate, authorize, record, process, and report transactions (as well as events and conditions) consistent with management's assertions embodied in the financial statements.
Condition: Deficiencies in the internal control component of control activities adversely affected the Academy's ability to initiate, authorize, record, process, and report financial data in accordance with the regulatory basis of accounting such that there was a reasonable possibility that a material misstatement of the Academy's financial statements would not be prevented or detected and corrected on a timely basis. Internal controls related to expenditures were not always performed.
Specifically, during our testing of expenditures, we identified the Academy did not have internal controls implemented for approval/authorization of expenditures prior to purchase. Additionally, electronic funds transfers totaling $112,772 were not authorized in writing by both the disbursing officer of the board of directors and the superintendent, as required by Ark. Code Ann. § 6-13-701(e)(1) and Arkansas Department of Education (ADE) Commissioner's Memo COM-12-036.
Cause: Fiscal year ended June 30, 2024, was the Academy's first year of operation, and internal controls surrounding expenditures were not fully established and implemented.
Effect or potential effect: Deficiencies in the Academy's internal control system could hinder the prevention or detection of errors in the financial accounting records. Such records are utilized in the preparation of the Academy's financial statements in conformity with the regulatory basis of accounting.
Recommendation: The Academy should establish and maintain internal controls that will initiate, authorize, record, process, and report transactions consistent with management's assertions embodied in the financial statements and that will safeguard the Academy's assets.
Views of responsible officials: A revision to the PO process, implemented April 22, 2025, requires a PO to be approved in writing by the Director of Operations and the Superintendent before a purchase can be made.