Early Childhood Alliance, Inc.Non-Profit

2023-001 Material Adjustment - Criteria: Management is responsible for preparing financial statements in accordance with Generally Accepted Accounting Principles. Condition: Insufficient controls over financial reporting. A material audit adjustment was required to prevent the financial statements from being materially misstated. Cause: Claims receivable from the prior year that were paid in the current year were included in the current year income. Effect: Could result in undetected errors and irregularities and misstated interim financial reports. The risk with this condition is that necessary adjustments to the financial statements to record material misstatements may be missed and there is no control in place to detect and correct this condition. Questioned Costs: None noted. Recommendation: Improve internal controls to prevent these types of adjustments. Ensure process in place to include activity in the correct period. Views of Responsible Officials and Planned Corrective Actions:Management will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements and increase the accuracy of the internal financial reports used by management. The Senior Accountant records the CCDF revenue as it comes in bi-weekly. The CFO calculates the monthly accrual. The Senior Accountant and CFO worked together to create a reconciling process to ensure correct reporting of CCDF revenue.