CodeVA, Inc.Non-Profit

Condition: During the audit, it became apparent that there were insufficient procedures in place to ensure GAAP-compliant accounting and financial reporting, primarily around cutoff accruals and unearned revenue. Criteria: The Organization should have proper controls, personnel, and oversight in place to produce an effective control environment related to GAAP-basis accounting and financial reporting. Cause: The Organization does not have proper controls related to recording, review, and oversight of the financial accounting and reporting functions. Effect: Several adjusting entries were identified during the audit in order to present GAAP-basis financial statements. Recommendation: The Organization should re-evaluate its current procedures for its accounting and reporting functions pertaining to accruals and restricted net asset classifications and appropriately address any deficiencies. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees will take the following actions to implement additional review and oversight procedures in its financial policies: • Reconcile accounts and identify receipts and expenses where accruals are needed. • Create documentation for month-end and year-end closing requirements. • Review receipts monthly to ensure all restricted funds are identified and classified properly in the Organization’s accounting system. • Update the Organization’s financial policies to reflect the established changes. • Process any necessary entries to adjust accounts accordingly. • Conduct internal training to bring awareness to staff of the necessity of accruals and project charging and tracking.

Material Weakness – As discussed at Finding 2023-001, the Organization does not have proper controls related to recording, review, and oversight of the financial accounting and reporting functions. Because of this material weakness in internal controls, the Organization did not identify unearned grant revenue. Procedures should be implemented to reconcile grant revenue and expenses on a monthly basis and the reconciliation should be subject to a review process for accuracy.

Condition: The Organization has requested reimbursement for amounts in excess of expenses incurred. Criteria: Under the relevant grant agreement guidelines, the grant operates as a reimbursement-based grant whereby expenses are first incurred by the Organization, and then reimbursed by the grantor. Cause: Amounts entered into analysis of expenses incurred were incorrectly keyed and not sufficiently reviewed for accuracy. Effect: The Organization requested and received reimbursement amounts in excess of expenses incurred. Context: From grant inception to Jun 30, 2023, the Organization has incurred $1,673,008 and has been reimbursed $1,967,184. Recommendation: The Organization should work with the grantor to either return the excess grant funds received or provide services under the grant without additional reimbursement. Views of Responsible Officials and Planned Correction Actions: The Organization will work with the grantor to resolve this issue.

Condition: The Organization has reported expenses in excess of amounts incurred. Criteria: Under the relevant grant agreement guidelines, the Organization is to report expenses incurred for reimbursement on a quarterly basis. Cause: Amounts entered for expense reporting were incorrectly keyed and not sufficiently reviewed for accuracy. Effect: The Organization reported and received reimbursement amounts in excess of expenses incurred. Context: From grant inception to Jun 30, 2023, the Organization has incurred $1,673,008 and has been reimbursed $1,967,184. Recommendation: The Organization should work with the grantor to either return the excess grant funds received or provide services under the grant without additional reimbursement. Views of Responsible Officials and Planned Correction Actions: The Organization will work with the grantor to resolve this issue.