Preparation of Bank Reconciliation
Our audit revealed that the organization does not prepare a formal monthly bank reconciliation for all cash accounts including the reserve accounts. In addition, we noted several transactions that were not recorded properly to the general ledger. A strong system of internal controls incorporates monthly bank reconciliations which should be prepared and agreed to the general ledger. In addition, any discrepancies should be investigated and resolved in a timely matter. Failure to reconcile cash accounts monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management prepare monthly bank reconciliation on timely basis and investigate any discrepancies from the general ledger.
Review General Ledger Transactions
Our audit revealed that several transactions were posted to incorrect accounts. In order to maintain accurate account balances, it is imperative that the transactions are properly recorded in the general ledger. This occurred due to management oversight. Failure to review the general ledger monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management review the transaction posted in the general ledger monthly and investigate any incorrect posting to the accounts.
Capitalization of Fixed Assets
Our audit revealed that there several transactions were charged to an expense account that should have been capitalized as a fixed asset and several transactions that were capitalized that should have been expensed. Generally accepted accounting principles allows for capitalization of costs if the organization anticipates receiving future benefits from such assets. Philippian Garden’s policy is to capitalize initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. This occurred due to management oversight. Failure to properly capitalize fixed assets may cause the financial statements to be inaccurate.
Recommendation
We recommend that the management capitalize fixed assets in accordance with established policies.
Tenant Security Deposits
Our audit revealed that the recorded security deposit liability exceeds the corresponding security deposit asset. As of December 31, 2024, the security deposit liability of $16,323 did not agree with the security deposit asset of $15,324. In accordance with Generally Accepted Accounting Principles (GAAP), security deposits collected from tenants should be held in a designated account and recorded as a liability. A corresponding asset should be maintained to ensure funds are available for refunds when tenants vacate. This occurred due to management oversight. Failure to maintain proper account balances can result in financial risk or disagreements with tenants.
Recommendation
We recommend that management conduct a reconciliation of security deposit liabilities and assets to identify any discrepancies monthly, establish or reinforce controls to ensure all collected deposits are held in a separate account, and review accounting practices to properly record and track security deposit transactions.
Preparation of Bank Reconciliation
Our audit revealed that the organization does not prepare a formal monthly bank reconciliation for all cash accounts including the reserve accounts. In addition, we noted several transactions that were not recorded properly to the general ledger. A strong system of internal controls incorporates monthly bank reconciliations which should be prepared and agreed to the general ledger. In addition, any discrepancies should be investigated and resolved in a timely matter. Failure to reconcile cash accounts monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management prepare monthly bank reconciliation on timely basis and investigate any discrepancies from the general ledger.
Review General Ledger Transactions
Our audit revealed that several transactions were posted to incorrect accounts. In order to maintain accurate account balances, it is imperative that the transactions are properly recorded in the general ledger. This occurred due to management oversight. Failure to review the general ledger monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management review the transaction posted in the general ledger monthly and investigate any incorrect posting to the accounts.
Capitalization of Fixed Assets
Our audit revealed that there several transactions were charged to an expense account that should have been capitalized as a fixed asset and several transactions that were capitalized that should have been expensed. Generally accepted accounting principles allows for capitalization of costs if the organization anticipates receiving future benefits from such assets. Philippian Garden’s policy is to capitalize initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. This occurred due to management oversight. Failure to properly capitalize fixed assets may cause the financial statements to be inaccurate.
Recommendation
We recommend that the management capitalize fixed assets in accordance with established policies.
Tenant Security Deposits
Our audit revealed that the recorded security deposit liability exceeds the corresponding security deposit asset. As of December 31, 2024, the security deposit liability of $16,323 did not agree with the security deposit asset of $15,324. In accordance with Generally Accepted Accounting Principles (GAAP), security deposits collected from tenants should be held in a designated account and recorded as a liability. A corresponding asset should be maintained to ensure funds are available for refunds when tenants vacate. This occurred due to management oversight. Failure to maintain proper account balances can result in financial risk or disagreements with tenants.
Recommendation
We recommend that management conduct a reconciliation of security deposit liabilities and assets to identify any discrepancies monthly, establish or reinforce controls to ensure all collected deposits are held in a separate account, and review accounting practices to properly record and track security deposit transactions.
Preparation of Bank Reconciliation
Our audit revealed that the organization does not prepare a formal monthly bank reconciliation for all cash accounts including the reserve accounts. In addition, we noted several transactions that were not recorded properly to the general ledger. A strong system of internal controls incorporates monthly bank reconciliations which should be prepared and agreed to the general ledger. In addition, any discrepancies should be investigated and resolved in a timely matter. Failure to reconcile cash accounts monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management prepare monthly bank reconciliation on timely basis and investigate any discrepancies from the general ledger.
Review General Ledger Transactions
Our audit revealed that several transactions were posted to incorrect accounts. In order to maintain accurate account balances, it is imperative that the transactions are properly recorded in the general ledger. This occurred due to management oversight. Failure to review the general ledger monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management review the transaction posted in the general ledger monthly and investigate any incorrect posting to the accounts.
Capitalization of Fixed Assets
Our audit revealed that there several transactions were charged to an expense account that should have been capitalized as a fixed asset and several transactions that were capitalized that should have been expensed. Generally accepted accounting principles allows for capitalization of costs if the organization anticipates receiving future benefits from such assets. Philippian Garden’s policy is to capitalize initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. This occurred due to management oversight. Failure to properly capitalize fixed assets may cause the financial statements to be inaccurate.
Recommendation
We recommend that the management capitalize fixed assets in accordance with established policies.
Tenant Security Deposits
Our audit revealed that the recorded security deposit liability exceeds the corresponding security deposit asset. As of December 31, 2024, the security deposit liability of $16,323 did not agree with the security deposit asset of $15,324. In accordance with Generally Accepted Accounting Principles (GAAP), security deposits collected from tenants should be held in a designated account and recorded as a liability. A corresponding asset should be maintained to ensure funds are available for refunds when tenants vacate. This occurred due to management oversight. Failure to maintain proper account balances can result in financial risk or disagreements with tenants.
Recommendation
We recommend that management conduct a reconciliation of security deposit liabilities and assets to identify any discrepancies monthly, establish or reinforce controls to ensure all collected deposits are held in a separate account, and review accounting practices to properly record and track security deposit transactions.
Preparation of Bank Reconciliation
Our audit revealed that the organization does not prepare a formal monthly bank reconciliation for all cash accounts including the reserve accounts. In addition, we noted several transactions that were not recorded properly to the general ledger. A strong system of internal controls incorporates monthly bank reconciliations which should be prepared and agreed to the general ledger. In addition, any discrepancies should be investigated and resolved in a timely matter. Failure to reconcile cash accounts monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management prepare monthly bank reconciliation on timely basis and investigate any discrepancies from the general ledger.
Review General Ledger Transactions
Our audit revealed that several transactions were posted to incorrect accounts. In order to maintain accurate account balances, it is imperative that the transactions are properly recorded in the general ledger. This occurred due to management oversight. Failure to review the general ledger monthly could result in errors or irregularities to go undetected.
Recommendation
We recommend that management review the transaction posted in the general ledger monthly and investigate any incorrect posting to the accounts.
Capitalization of Fixed Assets
Our audit revealed that there several transactions were charged to an expense account that should have been capitalized as a fixed asset and several transactions that were capitalized that should have been expensed. Generally accepted accounting principles allows for capitalization of costs if the organization anticipates receiving future benefits from such assets. Philippian Garden’s policy is to capitalize initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. This occurred due to management oversight. Failure to properly capitalize fixed assets may cause the financial statements to be inaccurate.
Recommendation
We recommend that the management capitalize fixed assets in accordance with established policies.
Tenant Security Deposits
Our audit revealed that the recorded security deposit liability exceeds the corresponding security deposit asset. As of December 31, 2024, the security deposit liability of $16,323 did not agree with the security deposit asset of $15,324. In accordance with Generally Accepted Accounting Principles (GAAP), security deposits collected from tenants should be held in a designated account and recorded as a liability. A corresponding asset should be maintained to ensure funds are available for refunds when tenants vacate. This occurred due to management oversight. Failure to maintain proper account balances can result in financial risk or disagreements with tenants.
Recommendation
We recommend that management conduct a reconciliation of security deposit liabilities and assets to identify any discrepancies monthly, establish or reinforce controls to ensure all collected deposits are held in a separate account, and review accounting practices to properly record and track security deposit transactions.