Finding Text
B. Material Weakness in Internal Control Finding 2022-002 Internal Control over Reconciliation of Accounting Records Condition: During audit procedures, we request confirmations be prepared to confirm revenue and accounts receivable at year end from grantors and/or other sources of revenue. The auditor calculates the materiality of revenue to be confirmed, the confirmations are prepared by the client and given to the auditor for actual mailing (or emailing or electronic signature). Due to the Organization?s numerous sources of grants, there were nineteen (19) confirmations, of which two (2) were returned from the initial mailing. After two additional unsuccessful resending of the confirmations, the client obtained, and provided to the auditor, the correct amount(s) to be confirmed, or correct address, or correct contact person, or correct grant contract number. The confirmations were then sent a fourth time, which was successful. Cause: The Organization did not have adequate supervisory review of the work of the Accounting Manager in preparing accurate and complete confirmations with adequate supporting documentation. The Accounting Manager did not have adequate skills, knowledge and experience (SKE) to prepare the confirmations without management supervision, stating she did not understand the policies and procedures regarding the preparation and sending of confirmations. Criteria: Uniform Guidance Part 6 ? Internal Control The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Government Auditing Standards Chapter 5 Internal Control Requirement: System of Quality Control 5.04 An audit organization should document its quality control policies and procedures and communicate those policies and procedures to its personnel. The audit organization should document compliance with its quality control policies and procedures and maintain such documentation for a period of time sufficient to enable those performing monitoring. Effect: There was a lack of communication between management and the Accounting Manager regarding the responsibilities of the Organization and the responsibilities of the auditor. Management did not provide adequate supervision of the audit process and/or designate a person with SKE to TRANSITIONAL RESOURCES SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2022 (continued) evaluate the adequacy and results of the services; and accept responsibility for them, as noted in the signed engagement letter. Recommendation: We recommend the Accounting Manager receive additional training in the audit process and/or receive additional supervision by supervisory personnel. We recommend management provide supervisory review of documents prepared for the audit. If internal supervision is not available, we recommend such services be provided by experienced, outside personnel. We recommend supervisory personnel review accounting information provided to the auditor to verify it is complete, accurate, and has been timely prepared. Management?s Response: Management concurs with the finding and recommendation and is taking appropriate corrective action.