Finding Text
Criteria: Complete controls over financial reporting include the ability to prepare consolidated financial statements and accompanying notes to the consolidated financial statements and the consolidated schedule of expenditures of federal awards that are materially correct and include all required disclosures. Condition: As auditors, we were requested to draft the consolidated financial statements from data provided by Valle del Sol, Inc. and Subsidiary. The data included material misstatements which, if not corrected through audit adjustments, would have resulted in consolidated financial statements that were materially misstated. Additionally, as part of audit procedures, we identified misstatements, including approximately $53,000 of expenditures related to the year ended June 30, 2021 for Assistance Listing No. 93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services, which, if not corrected, would have resulted in the consolidated schedule of expenditures of federal awards to be materially misstated. Cause: Valle del Sol, Inc. and Subsidiary has limited staff to prepare full disclosure consolidated financial statements. In addition, there has been turnover in management and accounting. Valle del Sol, Inc. and Subsidiary prepared the consolidated SEFA, however there were errors identified as a result of audit procedures. Effect: There was material misstatement to the consolidated financial statements and consolidated SEFA that may not have been identified without assistance of auditors. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that Valle del Sol, Inc. and Subsidiary is aware of this condition on financial reporting purposes. Management should continually be aware of the financial accounting and reporting of Valle del Sol, Inc. and Subsidiary and changes in the accounting and reporting requirements. Steps should be developed to ensure that all new funding sources are evaluated by management for inclusion or exclusion from the consolidated SEFA. Views of Responsible Officials: Management agrees with the finding.