CAYUGA COUNSELING SERVICE INCNon-Profit

2022-001 - Financial Statement Preparation and Reconciliation of Account Balances Criteria: Effectively designed and executed policies and procedures of financial processes should exist to ensure proper recordkeeping and reporting. Condition: Adjustments to clinical billings were not posted to the general ledger during the year under audit. In addition, the reserve for doubtful accounts was not evaluated and the prior year reserve was liquidated, creating revenue. Further, grant and contract receivables, deferred revenue and associated revenue were not reconciled. Cause: Reconciliation of certain account balances did not take place consistently throughout the year or at year end. Effect: The lack of reconciliations led to material audit adjustments necessary to correct significant errors identified in the following areas: accounts receivable, deferred revenue, bad debt expense and associated revenue accounts. Further, financials were used for decision-making purposes during the year that contained material misstatements. Recommendation: We recommend management ensure reconciliations are performed on a timely basis throughout the year as part of the monthly financial reporting processes before financial records are presented to executive management and the board of directors for decision-making purposes. Views of Responsible Official and Planned Corrective Actions: Management has established a policy for timely and methodical management of clinical billings and reconciliation with the general ledger. In addition, management has established a policy and procedure to reflect receivables in the billing management system at an expected realizable rate to also be reflected in the general ledger at the time of billing. Further, transition in the fiscal manager position is taking place and management will ensure that receivables and associated balances are reconciled and analyzed timely and that revenue is recognized in accordance with Generally Accepted Accounting Principles.

2022-002 - Adequate Financial Analysis and Oversight of Financial Records Criteria: Effectively designed and executed policies and procedures of financial processes should exist to ensure adequate financial analysis and oversight are present to properly record and report financial information. Condition: There was a lack of analysis of financial information and oversight over financial records/reporting throughout the year on an overall and individual program/grant level. Cause: Adequate supervision and timely oversight of grant/contract and program financials did not take place creating certain programs to generate losses for cost that could have been vouchered. Further, there was not adequate communication between finance personnel and programmatic personnel throughout the year. Effect: The lack of supervision and oversight resulted in the need for significant adjustments amongst programs to properly present financial results at the program level. Further, executive management and program management did not have accurate program financial data throughout the year. Recommendation: We recommend the management enhance regular reconciliation and reporting at the program and/or grant/contract level. Further, executive management should work with programmatic personnel to regularly assess the detailed financial results of each program, performing evaluations of the collectability of accounts receivable, budget modifications, and other financial assessments in tandem with programmatic reporting. Views of Responsible Official and Planned Corrective Actions: Executive management will expand regular review of timely monthly financials and will review such details with the finance committee of the board. Executive management will work with the program management team to understand budgeting, review budgets with their program managers on a monthly basis and empower them to complete budget modification timely. Executive management will ensure there is clear supervision and oversight duties and that these duties are adequately segregated.

2022-003 Internal Control Design and Oversight Condition: Two of eight selected payroll charges selected for testing lacked one required signature, either of the employee or a supervisor, on the Personnel Activity Report. In one additional instance, the signatures did not include the required date as evidence of timeliness of preparation or approval. Criteria: Effectively designed and executed controls should be present to ensure proper recordkeeping and reporting. Cause: In certain circumstances, documented processes were not followed. Effect: Payroll and benefits were charged that were not properly reviewed/approved or the approval may not have taken place timely. Recommendation: The auditor recommends that controls be executed to ensure adequate and timely oversight take place. View of Responsible Official: Management agrees and has implemented processes to review Personnel Activity Reports on a timely basis, this process will be reinforced and personnel reminded of the importance of following current procedures.

2021-001 - Financial Statement Preparation and Reconciliation of Account Balances Criteria: Effectively designed and executed policies and procedures for financial processes should exist to ensure proper recordkeeping and reporting. Condition: Timely, complete and accurate financial statements were not available to management or those charged with governance for decision-making purposes during the year under audit. Cause: Timely oversight of financial records, including but not limited to the reconciliation of account balances and vouchering/billing for services delivered, did not take place during the year under audit. Further, the division of roles and responsibilities amongst the finance team were inequitably assigned. Effect: The lack of reconciliations and timely recording of accounting transactions led to significant audit adjustments necessary to correct significant errors identified in the following areas: cash, grants/program receivables, accrued liabilities/accrued expenses, depreciation/fixed assets, and program and grant revenue/expenditures. Recommendation: We recommend the management reassess roles and responsibilities amongst the finance department to equitably divide responsibilities, further document policies and procedures with respect to financial processes to ensure the timely preparation of complete and accurate financials, including that reconciliations be prepared and reviewed timely throughout the year. Additionally, enhanced oversight of financial records, supporting reconciliations and other source documents should take place monthly by both the executive management team and those charged with governance. Views of Responsible Official and Planned Corrective Actions: The finance director will update internal procedures to ensure it includes clear objectives, accounts are clearly assigned to specific staff, frequency of reconciliation is identified, and checks are in place to ensure reconciliations are being completed timely. Such procedures will be reviewed with management and the finance committee. Further, management is in the process of hiring an accounting manager, the Organization has grown significantly over the last several years without an increase in staffing within the finance department. This position will be able to assist the finance director by taking on some of the additional job duties that comes along with a growing agency.

2021-002 Internal Control Design and Oversight Condition: In three of eleven selected payroll charges, internal processes were not followed with either the Personnel Activity Report time allocation not being completed, not agreeing to the Organization's payroll reporting, and/or not agreeing to the OVS Functional Time Sheets submitted. In addition, in two of those instances, the Personnel Activity Report also lacked one or more required signature. Criteria: Effectively designed and executed controls should be present to ensure proper recordkeeping and reporting. Cause: In certain circumstances, internal control processes are not designed to incorporate adequate oversight and in other circumstances, supervision processes were not followed. Effect: Payroll and benefits were charged that were not properly reviewed/approved or properly reconciled to source documents. Recommendation: The auditor recommends that controls be designed and executed to ensure adequate oversight and reporting take place. View of Responsible Official: Management agrees with the recommendation and plans has/will implement the following: In July 2021, the Organization incorporated PARS for all staff; the current process has three reviews prior to payroll processing and a fourth review after payroll is processed but prior to the completion of the payroll journal entry into the books and records. Management will further educate personnel on these processes.

2020-001 Internal Control Design and Oversight Condition: In four of ten selected payroll charges, internal processes were not followed with either the Personnel Activity Report time allocation not being completed, not agreeing to the Organization's payroll reporting, and/or not agreeing to the OVS Functional Time Sheets submitted. In addition, in two of those instance the OVS Functional Time Sheet also lacked one or more required signature. Criteria: Effectively designed and executed controls should be present to ensure proper recordkeeping and reporting. Cause: In certain circumstances, internal control processes are not designed to incorporate adequate oversight and in other circumstances, supervision processes were not followed. Effect: Payroll and benefits were charged that were not properly reviewed/approved, further inaccurate functional time sheets were provided to the grantor. Recommendation: The auditor recommends that controls be designed and executed to ensure adequate oversight and reporting take place. View of Responsible Official: Management agrees with the recommendation and plans to implement the following: Personnel Activity Reports will be compared to timesheets by Supervisors prior to the submission to the finance department and reviewed again by the finance department prior to the processing of payroll. The review will consist of comparing the hours worked with those reported on the employee?s timecard and comparing the labor allocation to program budgets. The Functional timesheets that are required quarterly by the grantor will be compared to the timecards and Personnel Activity reports for each quarter prior to submission.

2020-002 Effective Design and Consistent Execution of Vouchering Condition: General ledger records on a quarterly basis do not fully agree to claims vouchered making oversight functions difficult. Further the organization-wide allocation support for certain expenses was not maintained on a quarterly basis making the reperformance of the allocations difficult. In addition, management has not updated payroll allocations of personnel amongst programs further complicating voucher preparation and oversight functions. Criteria: Effective and detective controls should be integrated in processes to ensure complete and accurate reporting in accordance with grant requirements, including the retention of supporting documentation and supervisory oversight. Cause: Processes are not clearly defined or consistently followed with respect the allocation of payroll, further, such processes are manually driven and subject to human error. This coupled with the fact that allocation support was not maintained and vouchers are not reconciled quarterly to the general ledger, make the supervision process ineffective. Effect: Reconciliation between the vouchers and the general ledger, including the methodology for allocations was challenging to recompute. Recommendation: The auditor recommends that a formal voucher process be designed and documented to ensure complete and consistent vouchering. The process should include the maintenance of complete allocation and payroll support to substantiate to claim and reconciliation with the general ledger at least quarterly before submission of the voucher. View of Responsible Official: Management agrees with the recommendation and plans to implement the following: A copy of the allocation method used for each voucher, when applicable, will be attached to the supporting documents. In addition, the Finance department is working on revising the current check request form to include an allocations section so that Directors can allocate invoices that are not part of the Agency Cost Allocation Plan. For invoices that are allocated across multiple programs that are not directly charged off to a specific grant, the Finance department is in the process of developing a Cost Allocation Plan that will address how to allocate invoices based on the type expenditure. The Cost Allocation Plan will be reviewed and updated on an as needed basis as programs are added or removed.