Audit 10227

Material Adjustments and Maintenance of General Ledger-Criteria: The District is responsible for preparing annual financial statements in accordance with generally accepted accounting principles (GAAP). Timely recording of transactions on an accrual basis is in accordance with GAAP and provides more meaningful financial information. Condition: Although the year-end financial statements are prepared on the appropriate accrual basis, the District maintains its general ledger on a cash basis throughout the year. Accrual entries for revenue, receivable, expenditures, payables, and other general ledger account adjustments are posted only at year end. Reconciliations are prepared on a timely basis for some transaction classes, but not all. Cause: Routine preparation of reconciliations of all detailed account balances within the general ledger is not being performed due to limited available personnel. Effects: Failure to properly account for and reconcile revenue, receivables, expenditures, payables, and other general ledger transactions could distort financial information provided to management and the Board of Commissioners and could result in critical financial decisions being made in consideration of incomplete data. Recommendation: Year-end closing entries should be made, if possible, by District personnel. We understand that that the financial information is accurately reported on the general ledger on a cash basis. However, material entries were required as a result of audit procedures to accurately present the financial statements on a basis consistent with U.S. GAAP. Should limited staffing be a concern, we recommend that the District outsource the year end closing entries to an accounting firm so that financial statements are properly stated before they are audited. Management’s Response: The District will consider this recommendation and explore the above as well as alternative options for implementation.

Material Adjustments and Maintenance of General Ledger-Criteria: The District is responsible for preparing annual financial statements in accordance with generally accepted accounting principles (GAAP). Timely recording of transactions on an accrual basis is in accordance with GAAP and provides more meaningful financial information. Condition: Although the year-end financial statements are prepared on the appropriate accrual basis, the District maintains its general ledger on a cash basis throughout the year. Accrual entries for revenue, receivable, expenditures, payables, and other general ledger account adjustments are posted only at year end. Reconciliations are prepared on a timely basis for some transaction classes, but not all. Cause: Routine preparation of reconciliations of all detailed account balances within the general ledger is not being performed due to limited available personnel. Effects: Failure to properly account for and reconcile revenue, receivables, expenditures, payables, and other general ledger transactions could distort financial information provided to management and the Board of Commissioners and could result in critical financial decisions being made in consideration of incomplete data. Recommendation: Year-end closing entries should be made, if possible, by District personnel. We understand that that the financial information is accurately reported on the general ledger on a cash basis. However, material entries were required as a result of audit procedures to accurately present the financial statements on a basis consistent with U.S. GAAP. Should limited staffing be a concern, we recommend that the District outsource the year end closing entries to an accounting firm so that financial statements are properly stated before they are audited. Management’s Response: The District will consider this recommendation and explore the above as well as alternative options for implementation.