Finding 8678 (2021-003)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2021
Accepted
2024-01-16

AI Summary

  • Core Issue: The Association failed to recognize revenues and receivables in the correct period for reimbursement-based programming.
  • Impacted Requirements: This violates U.S. GAAP, which requires revenue recognition when products or services are delivered.
  • Recommended Follow-Up: Implement controls to ensure timely and accurate recording of receivables in line with corresponding expenditures.

Finding Text

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Corrective Action Plan

Recommendation: The Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Containment Through this audit process and staff turnover, tasks have been distributed and processes have been implemented immediately to meet the expectations that an AR transaction be entered into the fiscal system within a timely manner of one week or sooner. Root Cause Due to a lack of knowledge of the new software system. Not all information was migrated into the new software system in a timely manner, making it difficult to use at its full potential. OCCDA had a large turnover in the fiscal team during the audit process. The transition to the new fiscal software was during the height of the COVID‐19 pandemic, making it difficult to complete training and migration of the new system. Action Taken Immediately in 2023, the fiscal team implemented adding reports/documentation to all requests for funding to allow for better tracking and record keeping. Newly hired staff have established a clear understanding of the naming conventions for clarity and accurate reporting. Tasks have been realigned to specific positions so that all duties are covered and responsibilities are defined. This will ensure that all fiscal tasks are completed timely and accurately establishing controls for reimbursement funding. Training has been provided for the fiscal team on the internal processes and procedures to ensure the timely entry of all data and the importance of accurate monthly reports. Name(s) of contact person(s) responsible for corrective action: Fiscal Manager Planned completion date for corrective action plan: Completed

Categories

Internal Control / Segregation of Duties Cash Management Significant Deficiency

Other Findings in this Audit

  • 8676 2021-001
    Material Weakness
  • 8677 2021-002
    Significant Deficiency
  • 8679 2021-004
    Significant Deficiency
  • 8680 2021-001
    Material Weakness
  • 8681 2021-002
    Significant Deficiency
  • 8682 2021-003
    Significant Deficiency
  • 8683 2021-004
    Significant Deficiency
  • 8684 2021-001
    Material Weakness
  • 8685 2021-002
    Significant Deficiency
  • 8686 2021-003
    Significant Deficiency
  • 8687 2021-004
    Significant Deficiency
  • 8688 2021-001
    Material Weakness
  • 8689 2021-002
    Significant Deficiency
  • 8690 2021-003
    Significant Deficiency
  • 8691 2021-004
    Significant Deficiency
  • 8692 2021-001
    Material Weakness
  • 8693 2021-002
    Significant Deficiency
  • 8694 2021-003
    Significant Deficiency
  • 8695 2021-004
    Significant Deficiency
  • 585118 2021-001
    Material Weakness
  • 585119 2021-002
    Significant Deficiency
  • 585120 2021-003
    Significant Deficiency
  • 585121 2021-004
    Significant Deficiency
  • 585122 2021-001
    Material Weakness
  • 585123 2021-002
    Significant Deficiency
  • 585124 2021-003
    Significant Deficiency
  • 585125 2021-004
    Significant Deficiency
  • 585126 2021-001
    Material Weakness
  • 585127 2021-002
    Significant Deficiency
  • 585128 2021-003
    Significant Deficiency
  • 585129 2021-004
    Significant Deficiency
  • 585130 2021-001
    Material Weakness
  • 585131 2021-002
    Significant Deficiency
  • 585132 2021-003
    Significant Deficiency
  • 585133 2021-004
    Significant Deficiency
  • 585134 2021-001
    Material Weakness
  • 585135 2021-002
    Significant Deficiency
  • 585136 2021-003
    Significant Deficiency
  • 585137 2021-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.505 Affordable Care Act (aca) Maternal, Infant, and Early Childhood Home Visiting Program $110,512
93.600 Head Start $104,574
10.558 Child and Adult Care Food Program $14,144