Finding Text
2022-001 - Financial Statement Preparation and Reconciliation of Account Balances Criteria: Effectively designed and executed policies and procedures of financial processes should exist to ensure proper recordkeeping and reporting. Condition: Adjustments to clinical billings were not posted to the general ledger during the year under audit. In addition, the reserve for doubtful accounts was not evaluated and the prior year reserve was liquidated, creating revenue. Further, grant and contract receivables, deferred revenue and associated revenue were not reconciled. Cause: Reconciliation of certain account balances did not take place consistently throughout the year or at year end. Effect: The lack of reconciliations led to material audit adjustments necessary to correct significant errors identified in the following areas: accounts receivable, deferred revenue, bad debt expense and associated revenue accounts. Further, financials were used for decision-making purposes during the year that contained material misstatements. Recommendation: We recommend management ensure reconciliations are performed on a timely basis throughout the year as part of the monthly financial reporting processes before financial records are presented to executive management and the board of directors for decision-making purposes. Views of Responsible Official and Planned Corrective Actions: Management has established a policy for timely and methodical management of clinical billings and reconciliation with the general ledger. In addition, management has established a policy and procedure to reflect receivables in the billing management system at an expected realizable rate to also be reflected in the general ledger at the time of billing. Further, transition in the fiscal manager position is taking place and management will ensure that receivables and associated balances are reconciled and analyzed timely and that revenue is recognized in accordance with Generally Accepted Accounting Principles.