Audit 370555

Section II: Financial Statement Findings Finding 2024-001: Material Weakness in Internal Control over Financial Reporting Condition: The Abbey did not consolidate a subsidiary in its financial statements. Criteria: U.S. Generally Accepted Accounting Principles (GAAP) require that all subsidiaries be consolidated into the parent’s financial statements. Cause: The Abbey lacked adequate internal controls to ensure all subsidiaries were identified and consolidated. Effect: The financial statements were materially misstated, as they did not include the financial position and results of operations of the subsidiary. Recommendation: Implement procedures to ensure all subsidiaries are identified and consolidated in the financial statements. Views of Responsible Officials: We agree with the auditor’s finding that there is a material weakness in internal control over financial reporting due to the non-consolidation of a subsidiary. However, after careful consideration, management has decided not to implement the recommended procedures to consolidate the subsidiary. Justification: Management believes that the current procedures are adequate, and that the non-consolidation of the subsidiary does not materially affect the financial statements. The costs and resources required to implement the recommended procedures outweigh the benefits, given the subsidiary’s minimal impact on the overall financial position and results of operations. We will continue to monitor the situation and reassess it if necessary.