Maryland Humanities CouncilNon-Profit

Finding 2020 ? 01 Significant Deficiency over Financial Reporting Recommendation: In order to provide more accurate and timely accounting information, we strongly recommend that the Council establish more effective review and reconciliation policies and procedures as a customary part of the accounting process. This would involve monthly reconciliations of all accounts, making various adjustments throughout the year that have typically been performed at year-end only, and performing more frequent reviews of the general ledger throughout the year. Responsible Official?s Response and Corrective Action Plan: The management of Maryland Humanities Council takes this matter seriously and will work to implement a stronger internal control environment to ensure accuracy of financial reporting. Most of the issues related to the deficiencies in financial reporting were the result of turnover in the Finance Department in fiscal year 2020 and the lack of established financial policies and procedures. We hired a new Director of Administration in July 2021 who has significant experience in budgeting, fund accounting, federal awards and cooperative agreements, and a clear understanding of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. To ensure accuracy of financial reporting we will create financial policies aligned with The Uniform Guidance (2 CFR ? 200). In addition, we will create fiscal procedures aligned to the approved financial policies. The Director of Administration is responsible for creation of the policies and procedures and the Executive Director, Finance Committee and Board is responsible for review and approval of the new policies. We will perform monthly reconciliation of all bank accounts in the Financial Management System. The Executive Director will open all bank statements, review and sign them and forward to Director of Administration for reconciliation. The Executive Director will review and acknowledge review of all final bank reconciliations each month. We will review all grant agreements to determine fiscal requirements upon execution of grant agreements. We will charge expenses to restricted funds before charging to NEH funds. Quarterly reconciliation of restricted funds will be done for all government funds; corresponding invoice and drawdown requests each quarter will be submitted quarterly. We will perform quarterly review and reconciliation of all receivables. We will reconcile and update Accrued Leave and Fixed Asset Schedules quarterly and enter a quarterly adjustment in the FMS. While we believe the above practices will ensure accuracy of financial reporting, we also believe it is important to have an independent third-party, financial consultant/ CPA perform quarterly review of the chart of accounts and all reconciliations and have contracted with consultant to perform this service quarterly. The Board Finance Committee will provide an additional layer of oversight and support to ensure accountability of this corrective action plan. Planned Implementation Date of Corrective Action: Fiscal year 2021. Person Responsible for Corrective Action: Lindsey Baker, Executive Director

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