Finding Text
#2022-001 FINDING: Audit and Schedule of Expenditures of Federal Awards (SEFA) Financial Statement Preparation and Adjustments Federal Program Affected: Head Start/ALN #93.600 Compliance Requirement: Reporting Questioned Costs: N/A Condition and Cause: Turnover occurred in the third-party accountant used to adjust the accounting records to full accrual basis and assist with audit preparation. As such, the Organization requested we draft the audited financial statements and related footnote disclosures and perform certain adjusting entries in addition to our regular audit services. As a result, we proposed material audit and SEFA adjustments, had minor reconciling differences, and prepared the Organization?s SEFA and financial statements. Criteria and Effect: These adjustments were not identified as a result of the Organization?s existing internal controls, and therefore, could have resulted in a material misstatement of the Organization?s financial statements or noncompliance with the federal programs. It also resulted in significant additional audit time and expense. Repeat Finding from Prior Year: No Recommendation: We recommend the Organization hire a third party with adequate accrual accounting experience to prepare year-end accruals, reconcile accounts, and prepare the SEFA and financial statements. Management should also review the financial statements for accuracy at year-end. Response/Corrective Action Plan: The Organization agrees with the above finding. See Corrective Action Plan.