Finding Text
Findings Relating to the Financial Statement Audit as Required to be Reported in Accordance with Generally Accepted Government Auditing StandardsA. Material Weakness in Internal Control over Major ProgramFinding 2022-001 (reference Finding 2021-003Findings related to major federal awards required to be reported in accordance with Section 2 CDR-20.516(b):Department of the TreasuryAgency Rental Assistance ? CFDA 21.023B. Material Weakness in Internal ControlFinding related to the Financial Statement AuditFinding 2022-002 Internal Control over Cash Receipts and DisbursementsCondition:During audit procedures, we reviewed twelve months of bank statements and related reconciliations for the audit period. We noted the bank reconciliation supervisory approval process had not been performed for eleven months out of twelve months.Cause: The Organization did not have adequate supervisory review of month-end procedures to detect the bank reconciliations had not been performed in a timely manner. In addition, the prior year audit was issued in September 2022, limiting the time for compliance for the months of January through September 2022. October 2022 was reviewed timely, the months of November and December were not reviewed during the audit period.Criteria:Uniform Guidance Part 6 ? Internal ControlThe 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards.Government Auditing Standards Chapter 5 Internal Control, Requirement: System of Quality Control5.04 An audit organization should document its quality control policies and procedures and communicate those policies and procedures to its personnel. The audit organization shoulddocument compliance with its quality control policies and procedures and maintain such documentation for a period of time sufficient to enable those performing monitoring.II Findings Relating to the Financial Statement Audit as Required to be Reported in Accordance with Generally Accepted Government Auditing Standards (continued)procedures and peer reviews to evaluate the extent to which the audit organization complies with its quality control policies and procedures.Effect: Bank reconciliations are an essential internal control and are necessary in preventing and detecting fraud. They identify accounting and bank errors and provide explanations of the differences between accounting and bank balance cash balances. Due to the small number of, and often remotely located, accounting personnel, this lack of oversite could be discovered by employees in performing their normal duties.Recommendation: Bank reconciliations should be prepared within 30 days of the receipt of the statement. Banks may not correct any errors (or fraud) that is not detected and reported within that time frame. The bank statement and bank reconciliation should be reviewed by a person other than the preparer and that person should initial and date as reviewed (or electronic procedure of comparable nature).The bank reconciliation balance should agree with the general ledger balance(s). In addition, both statements should be initialed and dated as approved by supervisory personnel.