Dekalb Preparatory AcademyNon-Profit

Criteria: Dekalb Preparatory Academy, Inc. (“the School”) management is responsible for having internal controls and procedures in place to accurately report the results of its operations, close its books, and properly prepare the financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). This includes properly recognizing expenses and revenues in the proper period on the accrual basis of accounting. Condition: The lack of appropriate policies, procedures, and internal control processes led to a failure to accurately record financial information in the proper period and resulted in material audit adjusting entries. During the audit, auditor proposed adjusting journal entries were proposed for the following: Capitalization of fixed asset additions, correction of overstated prepaid expenses and accounts payable, proper recording of deferred outflows related to pension contributions, correction of misstated accrued payroll liabilities and correction of beginning balances of fixed assets and accumulated depreciation. Cause: The School has experienced turnover in its accounting department function. This has led to a failure to establish adequate internal control processes to detect and prevent inaccurate financial reporting, as well as a failure in properly oversighting outsourced accounting personnel. Marshall Jones notes the School hired a permanent inhouse CFO subsequent to year end. Effect: Insufficient internal controls over financial reporting could result in accounting errors or material misstatement due to error or fraud. Recommendation: Marshall Jones recommends that the School receive additional assistance in improving their financial reporting processes from individuals who are familiar with GAAP. Marshall Jones also recommends that management establish policies and procedures to ensure that management level reviews of monthly and annual financial information are performed on a timely basis. Views of Responsible Officials: Management of the School acknowledges the finding. Please refer to the Corrective Action Plan.

Criteria: 2 CFR section 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (“SEFA”) that must contain all federal awards expended during the period. 2 CFR section 200.502 requires proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cutoff and reporting. Condition: The School failed to timely prepare a complete and accurate SEFA. Cause: The School did not have an adequate process to track expenditures of federal awards for which purchases were made on the School’s behalf by the pass-through grantor. This resulted in the School’s initial draft of their SEFA not including all federal expenditures made by the School. Effect: Failure to adequately track all expenditures of federal awards could result in the SEFA being prepared inaccurately or in an untimely manner. Recommendation: Marshall Jones recommends that the School establish a process to track the expenditures of federal awards during the year, including awards for which purchases are made on the School’s behalf by the pass-through grantor. This will better enable the School to timely prepare a complete and accurate SEFA. Views of Responsible Officials: Management of the School concurs with the finding. Please refer to the Corrective Action Plan.