Audit 376576

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 incorporated 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 manner. 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 and discrepancies from the general ledger.

Conducting Board Meetings Our audit revealed that the Board of Directors does not formally meet yearly. In order to maintain accurate policies, decision making, and reviewing financials, it is imperative that the Board of Directors meet formally annually. This occurred due to management oversight. Failure to conduct Board of Directors meetings could result in errors or irregularities to go undetected. Recommendation We recommend that management set up formal Board of Directors meetings annually.

Capitalization of Fixed Assets Our audit revealed that 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. Pinn Gardens, Inc.’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.

Dual Check Signers Our audit revealed that all checks disbursed from the Operating account only used one signer for the check. Pinn Gardens, Inc.’s policy is to have two check signers for each check disbursement. This occurred due to understaffing. Failure to comply with the company’s own policy could result in errors or irregularities going undetected. Recommendation We recommend that the Board of Directors update the policy in accordance with established policies.