Finding Text
2022-001 Fully adjusted accounts Criteria ? Maintaining financial statements in accordance with Generally Accepted Accounting Standards (GAAP) requires that all adjustments be booked in the period to which they relate and that accounts being properly reconciled in a timely fashion. Condition and Context ? A number of accounts that comprise the detail of the statement of financial position required adjustment. Effect ? Account balances for cash, grants receivable, grant revenue and related grant expenditures were misstated by material amounts at June 30, 2022. Financial statements prepared by Bridges to Housing Stability, Inc. during the current fiscal year would have contained material misstatements. Cause ? The underlying accounts of the statement of financial position were not reconciled in a manner in accordance with GAAP. Recommendation ? Accounting personnel need to receive additional training in regard to account reconciliations and the application of GAAP, particularly in those areas covering non-profit organizations. In addition, a member of senior management or the board of directors needs to have sufficient knowledge of GAAP and financial statements to be able to review internal statements for reasonableness and appropriate application of GAAP. Management Response Bridges to Housing Stability, Inc. understands that account balances were misstated. Pursuant to guidance from our auditor, and online accounting resources, Bridges to Housing Stability, Inc. understands that appropriate recognition of revenue, and allocation of accrued expenses for the given period, is critical to proper GAAP accounting. Revenue recognized should be equal to expenditures and recognized appropriately according to funding allocations and objectives. Senior staff shall continue to enhance their understanding of the intricacies of nonprofit accounting. During the fiscal year of this audit, there was turnover of senior financial management staff. The Finance Manager hired stated in the interview process that she was knowledgeable in GAAP accounting, and audit procedures. During her time working with the auditor it became apparent that she did not have this training or knowledge and this led to the account balances being misstated. The Finance Manager?s employment with Bridges was terminated. Bridges has now hired an accounting firm to oversee financial management of Bridges with extensive training in GAAP accounting.Program CFDA 21.023 Finding 2022-001 is also a finding for the major federal program audit as it impacted the expenses charged to federal awards. Lack of sufficient accounting controls can impact all compliance requirements under federal awards.