Finding Text
Condition: During our review of the December 31, 2022 Accounts Receivable detail, it was noted that controls over billing and accounts receivable were not properly designed resulting in material adjustments in the reporting of Accounts Receivable and relating revenues. Per review of the Accounts Receivable detail as part of the audit procedures, there were noted to be significant unresolved credit balances as of December 31, 2022. Upon investigation by Management, it was noted that invoices entered in QuickBooks did not match the actual amounts billed through the Federal billing system. Therefore, when payment was received from the Federal agency, the cash receipt did not agree with the relating invoice in QuickBooks and therefore could not be relieved.
Criteria: Effective internal controls should be established to prevent or detect discrepancies between billing and the general ledger to ensure revenue is properly captured. Further, accounts receivable should be reconciled at a minimum annually resolving any significant credit balances.
Cause: Internal controls over billing and accounts receivable are not designed effectively to ensure completeness and accuracy of revenues and accounts receivable.
Effect: As a result of the condition noted above, material adjustments were required in the reporting of accounts receivable on the consolidated statement of financial position and revenues on the consolidated statement of activities.
Recommendation: We recommend that management review current internal controls over billing procedures and accounts receivable reconciliation to ensure that revenue is properly accounted for.