Audit of Family Road of Greater Baton Rouge shows reported bank fraud, tax exemption loss
Sep 23, 2024
BATON ROUGE, La. (BRPROUD) — An audit of the Family Road of Greater Baton Rouge outlined a counterfeit check and a tax-exemption status change for the fiscal year ending Dec. 31, 2023.
A CPA firm, Hebert Johnson & Associates Inc., was hired to conduct an independent audit for the Family Road of Greater Baton Rouge. The objective was to ensure financial statements are free of misappropriation, fraud or error.
According to the audit, the organization's bank processed a counterfeit check on Oct. 16, 2023. The check that was made out to an individual, totaled in the amount of $15,175. The Family Road of Greater Baton Rouge noticed the check cleared on the same day when logging into the online banking account. Organization leaders contacted the bank and filed a police report. The cause of the misappropriation is unknown, the audit shows. Family Road of Greater Baton Rouge was reimbursed for the total on Oct. 17, 2023.
The auditors suggest checking and reviewing cleared transactions and any additional misappropriation be reported to the Louisiana Legislative Auditor and the district attorney's office.
Management responded to the findings by saying they have controls in place to prevent and detect fraud. They did not know they needed to report the issue to the LLA and DA but will if it happens again.
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Tax exemption loss
The organization lost its tax-exemption status after it changed its fiscal year during the COVID-19 pandemic and the Internal Revenue Service had not yet recognized the new fiscal year. The organization reportedly did not file tax returns for the 2019 through 2022 fiscal years. During the pandemic, the organization's accountant had multiple life-altering personal incidents, which caused the returns to be filed untimely, according to the audit.
The auditors suggest Family Road review the IRS' Revenue Procedure 2014-11 to have its tax-exempt status reinstated and have the organization's Board of Directors review the 990 tax return form each year before submitting it.
Officials at the Family Road of Greater Baton Rouge said tax returns have been filed and are up to date. They are working to expedite their tax exemption status.
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