Finding Text
2022-03 (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: Current year activity in real estate and payable accounts were not properly recorded. Expenditures to improve buildings was erroneously recorded to repairs and depreciation expenses was not recorded. Expenditures invoiced prior to year-end but not yet paid were not properly recorded as accrued liabilities. Context: Deficiency was discovered while performing substantive testing on real estate balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions. The Organization should review its transactions invoiced but not paid prior to year end in order to properly record accrued liabilities. Response: We acknowledge that there is currently not a sufficient process in place to ensure that capital expenditures and accounts payable are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and accounts payable are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.