WEST CENTRAL COMMUNITY SERVICES INCNon-Profit

Condition: Lack of Periodic Reconciliations in Accounting Systems Criteria: The Committee of Sponsoring Organizations of the Treadway Commission (COSO) requires smaller entities to maintain the same internal control components for achieving effective internal control over financial reporting as their larger counterparts. Among the seven internal control procedures is a requirement to conduct periodic reconciliations in accounting systems. Occasional accounting reconciliations can ensure that balances in the accounting system match up with balances in accounts held by other entities, including banks, suppliers, and credit customers. Differences between these types of complementary accounts can reveal errors or discrepancies in the accounts, or the errors may originate with the other entities. Cause of Condition: Lack of proper training in the accounting software. Potential Effect of Condition: During the course of the audit, adjusting journal entries to asset and liability accounts resulted in a net increase of expenses of $23,710 and an increase in revenues of $24,073. While bank accounts were reconciled on a monthly basis, other accounts, including accounts receivable, accounts payable, prepaid expenses, and accrued expenses are not reconciled. While not material in the aggregate, entries increasing expense accounts amounted to $134,279 while entries reducing expense accounts amounted to $110,569. Recommendation: Improvements in this area over the prior year are noted and an internal control of reconciling not only the bank accounts, but also each balance sheet account on a monthly basis and correcting differences as needed has been implemented. We recommend that the Fiscal Officer receive additional training in working with QuickBooks Online, the Organization?s bookkeeping system. We further recommend that any consultants contracted have a working knowledge of the Head Start program and accrual basis accounting in addition to a working knowledge of the Organization?s bookkeeping software.

Condition: Lack of Periodic Reconciliations in Accounting Systems Criteria: The Committee of Sponsoring Organizations of the Treadway Commission (COSO) requires smaller entities to maintain the same internal control components for achieving effective internal control over financial reporting as their larger counterparts. Among the seven internal control procedures is a requirement to conduct periodic reconciliations in accounting systems. Occasional accounting reconciliations can ensure that balances in the accounting system match up with balances in accounts held by other entities, including banks, suppliers and credit customers. Differences between these types of complementary accounts can reveal errors or discrepancies in the accounts, or the errors may originate with the other entities. Cause of Condition: Lack of proper training in the accounting software. Potential Effect of Condition: During the course of the audit, adjusting journal entries to asset and liability accounts resulted in a reduction of expenses of $60,800. While bank accounts were reconciled on a monthly basis, other accounts, including accounts receivable, accounts payable, prepaid expenses, and accrued expenses are not reconciled. Entries to these accounts amounted to $111,800 (In addition, depreciation expense of $51,000 was not recorded). As a result, interim financial statements were misstated for each period in which they were presented to the board. Recommendation: An internal control of reconciling not only the bank accounts, but also each balance sheet account on a monthly basis and correcting differences as needed is recommended. We further recommend that the Fiscal Officer receive additional training in working with QuickBooks Online, the Organization?s bookkeeping system.

U.S. Department of Health and Human Services

West Central Community Services, Inc. did not comply with the non-federal matching requirements. While a waiver was discussed with the Regional Office in April 2019, prior to the end of the project year, the official request for waiver was dated September 11 2019, after the end of the project year.