Finding Text
Finding 2022-006 Report Preparation and Submission Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance. Condition and Context: It was discovered that the Organization demonstrated deficiencies in reporting accuracy and completeness, as well as a failure to comply with state law by not filing a required annual report. Upon review of the Organization?s reporting practices, it was observed that three out of the five reports selected for testing contained discrepancies, inaccuracies, or incomplete reporting metrics. These discrepancies raise concerns about the reliability of the Organization's reported data, which can impact decision-making, program effectiveness, and the organization's ability to fulfill its fiduciary responsibilities. Furthermore, the Organization failed to file the mandatory annual report as required by Indiana Code 5-11-1-4, further indicating a deficiency in compliance with local regulations. Criteria: Federal regulations and GAAP require organizations that receive federal funds to maintain accurate and complete records and reports. Additionally, state laws and regulations dictate the filing of annual reports to ensure transparency, accountability, and compliance with local requirements. Cause: The Organization lacks well-defined and standardized reporting procedures, leading to inconsistencies in data collection, compilation, and reporting. Further, the Organization lacks robust mechanisms to verify and validate the accuracy and completeness of the data before it is included in reports. Effect: The combination of inaccurate and incomplete reporting metrics and the failure to file the annual report has several implications for the Organization. First, inaccurate and incomplete reporting metrics undermine the credibility of the Organization's financial and programmatic information, potentially leading to misinformed decisions and jeopardizing stakeholder trust. Second, inaccurate reporting may hinder the organization's ability to effectively manage its programs, evaluate outcomes, and allocate resources appropriately. Third, the failure to file the required annual report constitutes non-compliance with state law, which could result in legal penalties, loss of privileges, and reputational damage. Finally, incomplete reporting obscures the Organization's financial and operational performance, impeding transparency and accountability to both internal and external stakeholders. Questioned Costs: There were no questioned costs identified. Recommendation: It is recommended that the Organization promptly develop and implement a reporting review process, which should identify the necessary reporting metrics dictated by the terms and conditions of their federal award documents. Second, the Organization should establish robust procedures for verifying and validating data before it is included in reports. Third, the Organization should immediately rectify the failure to file the annual report and implement procedures to ensure timely and compliant submission of all required reports in the future. Finally, the Organization should strengthen internal controls related to reporting to prevent recurrence of inaccuracies and incomplete metrics and ensure compliance with state reporting requirements. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding related to reporting deficiencies. The Organization has adopted internal policies to address this to include a grants management tracking system that records reporting requirements and a checks and balance system. The required annual report process has been initiated and a 2023 report will be filed in the month of October 2023.