Finding Text
FINDING NO. 2022-001 FINANCIAL STATEMENTS Federal programs All federal financial assistance programs Category Internal control Condition found. The Organization accounted for its activities based on the services provided, which are educational services and food services. During our financial and compliance audit procedures for the fiscal year ended June 30, 2022, we noted the following conditions related to the accounting procedures and financial reporting practices of the Organization: a. Accounting and interim financial reports are not executed on a current (month-to-month) basis. Accounting journals, general ledger and interim financial reports, such as Balance Sheet, Statement of Activities and Bank Reconciliations, monthly analysis of certain accounts are executed after the end of the related accounting year. Criteria 2 CFR 200.302 (b) (2), (4), (5) and (7) establish that the financial management system of each nonFederal entity must provide for the following: i. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. Cause Contracted outsource for the general accounting of the institution have been unable to prepare the monthly accounting and the related interim financial reports on a current basis. Effect Weaknesses in the internal controls of the institution, requiring extra efforts from the administration to compensate for the lack of current accountability with additional alternative measures and procedures. Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. Questioned costs None Identification as a Repeated Finding Included in prior years Findings No. 2017-001,2018-001, 2019-001,2020-001 and 2021-001. Recommendations The Organization should enforce its policies and procedures in order to accurately maintain its financial information, and on a timely basis, assuring that they reflect its assets and liabilities, and to maintain an appropriate control over its revenues and the amounts expended, which will allow a proper management and monitoring of operations. These policies and procedures should be enforced to consider the following: ? Establish monthly and year end closing procedures. ? Prepare monthly or quarterly financial reports for management evaluation and analysis. Views of Responsible Officials The Organization agrees with the finding. Executed actions have substantially improved their year-end closing procedures. They contracted a new accounting firm to improve their accounting and the interim financial reporting. Also, during the year ended June 30, 2022, an internal accountant was hired, who among other things, is coordinating and supervising the record keeping and compilation of interim and year end closing and reporting process. Subsequent to June 30, 2022, the institution decided to perform the accounting and reporting function internally, commencing on July 1, 2022.