Finding Text
Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy
Statement, grant recipients are required to implement financial systems that enable grant
recipients to maintain effective control over and accountability for all cash under the award.
Condition: The Association’s controls were not effective to ensure it performed the bank
reconciliation process on an accurate or timely basis.
We consider this internal control deficiency to be a significant deficiency.
Context: Our procedures included examining bank reconciliation reports for the December
2021 period. We reviewed the bank reconciliations for unusual transactions, large
reconciling items, and traced a sample of transactions to supporting documentation such as
copies of cleared checks, bank statements, or other items.
Cause: The Association changed the software used for processing its bank reconciliations from
Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration
did not include entering detailed outstanding reconciling items for cash accounts as of
December 31, 2020, resulting in the Association having difficulties reconciling their
cash accounts on a timely basis. The initial reconciliations included large journal
entries to cash accounts that did not have sufficient documentation as support and
resulted in the bank reconciliations being redone to properly account for outstanding
uncleared items that carried over from the prior fiscal year.
Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially
provided for the audit were not accurate. This resulted in the delay of the audit until
the bank reconciliations could be properly completed to account for outstanding uncleared
items that carried over from the prior fiscal year.
Recommendation: We recommend the Association follow its own documented controls to ensure it
prepares bank reconciliations on a timely and accurate basis.
View of Responsible Officials: There is no disagreement with this audit finding.