Finding Text
Finding 2022-001: Inadequate Financial Reporting Condition: We noted that fiscal year-end reconciling of the program advance liability and grants receivable were incorrectly prepared and required revision, also resulting in adjustments to CDT's unaudited financial statements. Criteria: CFR 200.303, Internal Controls, states that the non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Cause: The Organization did not have in place a formal system of reconciling the billings to the funders and earned revenue. Effect: Significant adjustments were proposed by management during the audit for the grants receivable and program advance. Recommendation: We strongly recommend that on a monthly or quarterly (at a minimum) basis there is a reconciliation of the billings between the funders and the revenue/costs related to the contracts to determine if there are any unbilled grants receivable or a grants advance. We also recommend detailed reviews/approvals of all supporting schedules be performed. Questioned Costs: None identified. Context: After performing initial audit procedures, we requested management to perform a reconciliation of the two accounts to properly determine the grant revenue and related grants receivable and grants advance. The condition noted is deemed to be systemic in nature. Identification as a Repeat Finding: 2021-001 and 2020-001 Management Views and Corrective Action Plan: Management agrees with the finding and recommendation. Management is working with the accounting team to implement a new process to ensure that account and grant reconciliations are performed on a quarterly basis, at a minimum. Management will review and approve all reconciliations. New procedures are also being implemented to tighten the information flow between management and the accounting team to streamline all aspects of the coding, data entry, and billing process.