Finding 592460 (2022-002)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-09-17

AI Summary

  • Core Issue: There was a material weakness in monitoring financial statements due to unsupported debt extinguishment.
  • Impacted Requirements: Federal funding organizations must have policies to ensure accurate financial reporting and detect misstatements.
  • Recommended Follow-Up: Obtain a legally binding document to confirm debt forgiveness before recording any extinguishments.

Finding Text

2022-02 Material Weakness Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Management decided that a payable to a related party was not supportable and extinguished the debt on its books. The other entity did not confirm that the debt is incorrect or forgiven. Context: Deficiency was discovered while performing substantive testing on liability balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Management did not obtain written documentation to support its position to extinguish the debt from its accounting records. Recommendation: The Organization should obtain a legally binding document prior to recording a debt extinguishment. Response: We acknowledge and will receive formal documentation that will legally forgive the debt or formalize the promissory note

Categories

Subrecipient Monitoring Material Weakness

Other Findings in this Audit

  • 16017 2022-001
    Material Weakness Repeat
  • 16018 2022-002
    Material Weakness
  • 16019 2022-003
    Material Weakness
  • 16020 2022-004
    Material Weakness
  • 16021 2022-005
    Significant Deficiency
  • 592459 2022-001
    Material Weakness Repeat
  • 592461 2022-003
    Material Weakness
  • 592462 2022-004
    Material Weakness
  • 592463 2022-005
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.239 Home Investment Partnerships Program $6.44M
21.023 Emergency Rental Assistance Program $2,979