Finding Text
Type of Finding: Significant deficiency in internal control over financial reporting.
Criteria: A system of internal control over financial reporting includes controls over recording revenues and expenditures within the appropriate fiscal period.
Condition and Context: During the course of the audit, an overstatement of current year expenditures was identified.
Questioned Costs: $58,384
Cause: The Association did not have a process in place for tracking services received during the fiscal year and invoiced after the fiscal year end in accordance with generally accepted accounting principles.
Effect: There was an understatement of the Association’s net assets without donor restrictions as of the beginning of the audit period and an overstatement of the Association’s total expenditures at the end of the audit period.
Recommendation: The Association should develop a process and control for oversight of invoices received after fiscal close for services received during the fiscal year.
Responsible Official’s Response: The Choanoke Area Development Association did receive the invoice dated November 8, 2022. CADA did not expense the invoice in the proper fiscal year of the Association. This invoice came after the closing of the prior year. The Association closed for the June 30, 2022 fiscal year in October 12, 2022. The Association’s accounting department recognizes the importance of ensuring that expenses are in the proper actual Association’s fiscal year. Therefore, whenever this situation occurs, the accounting department will reopen the proper year and account properly those invoices in the corresponding year then re-close. CADA will notify/remind vendors to submit vendor invoices timely. CADA programmatic and accounting staff will examine all invoices in accordance with fiscal policy requirements to ensure authorized posting in correct fiscal year. The Executive Director and the Finance Director will provide training to staff on the changes to the Fiscal Policy emphasizing the requirement to ensure that invoices are reconciled in the correct fiscal year.