Finding Text
Finding No. 2022-001: Financial Reporting ? Significant Deficiency Assistance Listing Program Title and Number: All Federal Agency: All Criteria An accounting system and effective internal control environment should support the preparation of the financial statements in accordance with Generally Accepted Accounting Principles (?GAAP?) and grant reports in accordance with Federal and State compliance requirements, including a robust financial close process at year end. Condition In fiscal year 2022, the Agency?s accounting processes and internal controls over financial reporting were not functioning timely to support generating complete and accurate financial information. Revisions to the grant schedule required adjustments to the trial balance; therefore, the grant schedule was not finalized timely. Cause The Agency experienced resource constraints and changes in finance department personnel during the fiscal year. Effect The books and records were not closed and finalized until many months after year end. Context The Agency?s accounting processes and internal controls over financial reporting were not performed in a timely manner. Recommendation We recommend that the Agency maintain an adequate level of appropriately trained and experienced personnel. This will help ensure that the accounting processes and internal controls over financial reporting will function properly, and that the financial close process will be complete, accurate, and timely. Management?s Response/View of Responsible Officials The Connection, Inc. agrees with these findings. Since October 2021, the finance department has turned over 75% of the accounting staff. These resignations, which were in response to COVID-19, included two senior staff with a collective 25 years of historical knowledge. Due to the difficulty in filling these open positions and then the steep learning curve once filled, our backlog of work created significant delays in monthly reporting, which then led to delays in providing requested audit information. The Connection, Inc. has instituted a comprehensive program whereby all finance department functions are cross trained with at least one other functional area to mitigate the impact of any one individual leaving the organization. We have also brought on a consultant to assist with the preparation of a detailed manual, which will outline the processes for all key functions performed. The consultant will also evaluate current processes and practices for grants management, internal controls, financial reporting, and succession planning within the department.