Entrepreneurship for All, Inc.Non-Profit

Item # 2023-001 Conditional Grant Revenue Recognition (Material Weakness in Internal Control) Criteria: Under Generally Accepted Accounting Principles (GAAP), advances received for conditional grants for expenses not yet incurred are considered a refundable advance liability and should be recognized as revenue only once the barriers are overcome, which includes incurrence of allowable costs under Office of Management and Budget Circular A-122. Condition: Management did not recognize conditional grant revenue for the full amount of the award after allowable costs were incurred. Cause: Management was unaware that conditional grant revenue was required to be deferred until allowable costs under the federal grant agreement were incurred and did not record the related revenue in the proper period. Effect: Conditional grant revenue was understated by $593,838. This is considered a material weakness in the Organization’s internal control over financial reporting. Recommendation: We recommend that management ensure that conditional grant revenue is recognized upon incurrence of allowable costs under the federal grant. We also recommend that management enroll in a professional education program that covers Uniform Guidance compliance. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout 2024 to be in full compliance with GAAP and the Uniform Guidance. This exercise is anticipated to be complete by the end of the fiscal year.

Item # 2023-002 Net Assets with Donor Restrictions (Material Weakness in Internal Control) Criteria: Under GAAP, net assets with donor restrictions should be released from restrictions when the award terms of the related grants or contributions are met. Condition: Management did not release all restricted net assets within the proper period. Cause: Management did not examine grant and contribution agreements carefully enough to determine the nature of the applicable terms for restrictions and did not take necessary measures to ensure that net assets with donor restrictions were properly released throughout the fiscal year. Effect: Net assets with donor restrictions were overstated by $3,571,287 and net assets without donor restrictions was understated by $3,571,287. Recommendation: We recommend that management ensures that it examines grant agreements carefully to determine the nature of the applicable terms for restrictions, and to take necessary measures to ensure that net assets with donor restrictions were properly released throughout the fiscal year. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout 2024 to be in full compliance with GAAP. This exercise is anticipated to be complete by the end of the fiscal year.

Item # 2023-003 Reconciliation of Bank Accounts (Significant Deficiency in Internal Control) Criteria: Under GAAP, bank accounts are required to be reconciled on a regular basis to ensure that they are properly stated under the accrual basis of accounting. Condition: During the year under audit, the Organization did not reconcile the ending balances of all accounts held with financial institutions during the fiscal year. Cause: The Organization did not compare the balances per statements received for bank accounts from financial institutions with its own internal account balances and failed to make the necessary accrual based accounting adjustments for reconciling items. Effect: Failure to update internal controls to comply with the requirements of the GAAP could result in ineffective monitoring of costs allocated to the federal program. Recommendation: The Organization should strengthen its internal control practices by updating its policies and procedures to comply with GAAP. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout 2024 to be in full compliance with GAAP. This exercise is anticipated to be complete by the end of the fiscal year.