Audit 340383

Material Weakness - Internal Control - Accounting Corrections Criteria According to Government Auditing Standards and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) a deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected, on a timely basis. Condition The auditor calculated, and LSWCD approved recording two material adjustments to the financial statements in order for the audited financial statements to be materially correct. Context LSWCD has a good bookkeeper, however, the accounting is not maintained by fund as two separate, self-balancing sets of accounts, resulting in a material adjustment to separate and balance the accounts by fund. A second material entry was made to grants receivable. Minor entries were made to other accrual accounts such as prepaid insurance, accrued payroll liabilities, capital assets additions and depreciation. Cause As noted under context, lack of knowledge of U.S. GAAP accrual accounting was the cause of the accrual accounting omissions that were corrected during the audit. Effect Initial accounting records provided for the audit included receivables and revenues understated by $364,780, with total assets understated by $424,761. Liabilities were understated by $14,867. The change in net assets was originally reported as a net loss of $226,407. Audited net income was actually $170,889, a difference of $397,295. Questioned Costs None. Recommendation Provide further training for the Finance Manager in governmental, and accrual accounting. Views of Responsible Officials and Planned Corrective Actions We agree with this finding. LSWCD has a good Financial Manager familiar with operations of soil and water conservation districts. LSWCD will provide online and other training for the Financial Manager to gain knowledge of governmental accounting, federal single audit requirements, and U.S. GAAP in an effort to provide accurate financial statements, reduce audit costs, and avoid errors in and omissions of year-end accruals

Material Weakness - Internal Control - Accounting Corrections Criteria According to Government Auditing Standards and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) a deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected, on a timely basis. Condition The auditor calculated, and LSWCD approved recording two material adjustments to the financial statements in order for the audited financial statements to be materially correct. Context LSWCD has a good bookkeeper, however, the accounting is not maintained by fund as two separate, self-balancing sets of accounts, resulting in a material adjustment to separate and balance the accounts by fund. A second material entry was made to grants receivable. Minor entries were made to other accrual accounts such as prepaid insurance, accrued payroll liabilities, capital assets additions and depreciation. Cause As noted under context, lack of knowledge of U.S. GAAP accrual accounting was the cause of the accrual accounting omissions that were corrected during the audit. Effect Initial accounting records provided for the audit included receivables and revenues understated by $364,780, with total assets understated by $424,761. Liabilities were understated by $14,867. The change in net assets was originally reported as a net loss of $226,407. Audited net income was actually $170,889, a difference of $397,295. Questioned Costs None. Recommendation Provide further training for the Finance Manager in governmental, and accrual accounting. Views of Responsible Officials and Planned Corrective Actions We agree with this finding. LSWCD has a good Financial Manager familiar with operations of soil and water conservation districts. LSWCD will provide online and other training for the Financial Manager to gain knowledge of governmental accounting, federal single audit requirements, and U.S. GAAP in an effort to provide accurate financial statements, reduce audit costs, and avoid errors in and omissions of year-end accruals