The Network: Advocating Against Domestic ViolenceNon-Profit

Criteria In order to ensure that financial statements are properly stated, it is necessary that revenue be recognized as prescribed by applicable revenue recognition accounting standards. Condition During our audit, we noted that contribution revenue and net assets with donor restrictions were misstated by a material amount. We also noted cost-reimbursement grants for which government contract revenue and deferred revenue were also misstated by a material amount. In both cases, the applicable revenue recognition standards were not adhered to. Context There were several contributions where revenue was not properly recognized and net assets with donor restrictions were not properly identified, tracked, and released. Government contract revenue was misstated for two federal programs and deferred revenue was misstated for one of these programs. During the audit, we assisted management in preparing the adjustments necessary to correct these issues for the period under audit. This finding is a repeat of finding 2022-001. Effect Management may not be able to detect material errors and omissions in its financial reports. As a result, inaccurate financial data may be shared with outside users. Cause The misstatement of donor-restricted contributions was caused by an accounting process in which unconditional contribution revenue with donor restrictions was not recognized when awarded, but rather, when donor restrictions were released or when payments are received, thus causing a timing delay in the recognition of revenue. The misstatement of the cost-reimbursement grant was due to an oversight in which an adjusting journal entry was not recorded to report unspent federal advances as deferred revenue. Recommendation We recommend that all unconditional contributions be recognized as revenue as of the earlier of receipt or notification of the contribution. Conditional contributions should be recorded in the period in which substantially all conditions have been met. We also recommend that net assets with donor restrictions be properly tracked and released as restrictions are met. Releases from restriction should be recorded as a reclassification between net asset accounts with no effect on revenue. Lastly, we recommend that cost reimbursement grants, regardless of funding source, be reconciled at year-end so that receivables, deferred revenue, and revenue can be adjusted as needed to ensure that the accounts are properly stated. Management Response Management concurs with this finding. See corrective action plan.

Finding 2023-002 – Noncompliance with Federal and State Reporting Requirements This finding is: New X Repeat from Prior Year Year originally reported? 2022 Federal Program Name: Coronavirus Emergency Supplemental Funding Program Project Numbers: 546-000-2413/820010 Assistance Listing Number: 16.034 Passed Through: Illinois Criminal Justice Information Authority Federal Agency: U.S. Department of Justice Criteria Reporting - 2 CFR Part 200 requires grantees to submit the Single Audit reporting package to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after receiving the audit report or nine months after the fiscal year end. Additionally, the Organization has grant agreements from State of Illinois agencies with terms requiring compliance with the State of Illinois Grant Accountability and Transparency Act (GATA). The Organization is also required to submit the same Single Audit reporting package plus a Consolidated Year-End Financial Report (CYEFR) to the GATA portal within nine months after the fiscal year-end. Condition During our testing, we noted that the Single Audit and GATA reporting packages were not submitted within the required timeframe for fiscal year 2022. Questioned Costs None Context The complete reporting packages were submitted to the FAC and GATA portals in July 2023. This was more than nine months after the fiscal year end. Effect The Organization was not in compliance with 2 CFR Part 200 and was classified as a high-risk auditee for fiscal year 2023. Cause This Organization underwent a change of accountants from fiscal year 2021 to fiscal year 2022 and subsequent change of accountants after fiscal year 2022. As such, there was a delay in completing the recording of year-end financial transactions, performing account reconciliations, and preparing financial reports for fiscal year 2022 as needed for the audit.Recommendation We recommend that current accounting personnel establish a schedule for completing the recording of all financial transactions, preparation of account reconciliations, and financial reports, including a CYEFR and SEFA (if applicable). This should be done in a timely manner to allow for a review by management and the board of directors. We further recommend that these procedures be included in an updated set of financial policies and procedures that are reviewed and approved by the board of directors. Management Response Management concurs with this finding. See corrective action plan.

Criteria The Network has grant agreements from State of Illinois agencies with terms requiring compliance with financial reporting requirements in accordance with Uniform Guidance and the State of Illinois Grant Accountability and Transparency Act (GATA). As such, for the year ended June 30, 2022, the Network is required to submit audited financial statements, a schedule of expenditures of federal awards (SEFA) and single audit reports to the Federal Audit Clearinghouse and the same audit package plus a Consolidated Year End Financial Report (CYEFR) to the GATA portal. All items are required to be submitted within nine (9) months after the Network?s fiscal year-end. Condition The Network did not submit its audited financial statements, SEFA and CYEFR and other required information to the Federal Audit Clearinghouse and GATA portal within nine (9) months after June 30, 2022. Cause This condition was due to several factors including a normal ?learning curve? experienced during its change of accountants from fiscal year 2021 to fiscal year 2022 and subsequent change of accountants after fiscal year 2022. As such, there was a delay in completing the recording of year-end financial transactions, performing account reconciliations and preparing financial reports for fiscal year 2022 as needed for the audit. Effect The effect is that controls over the financial reporting process were weakened thereby increasing the risk that material misstatements could be included in the financial statements without management being aware. Additionally, noncompliance with financial reporting deadlines could cause funding sources for the Network to suspend funding until compliance is achieved. Questioned Costs None noted. Recommendation We recommend that current accounting personnel establish a schedule of completing the recording all financial transactions and preparation of account reconciliations and financial reports, including a CYEFR and, if applicable, a SEFA, at year-end in a timely manner for review by management and the board of directors. We further recommend that these procedures be included in an updated set of financial policies and procedures that are reviewed and approved by the board of directors. Management Response See corrective action plan.