Finding 2022-01 - Source Documentation, Strengthen Controls over Financial Reporting (Significant Deficiency) Criteria: Management is responsible for establishing and maintaining effective internal control over financial reporting. Internal controls should allow management or employees in the no...
Finding 2022-01 - Source Documentation, Strengthen Controls over Financial Reporting (Significant Deficiency) Criteria: Management is responsible for establishing and maintaining effective internal control over financial reporting. Internal controls should allow management or employees in the normal course of performing their assigned functions to prevent or detect material misstatements in the financial reporting of all district funds. Condition: District prepared drawdown calculations according to an internal reconciliation spreadsheet tool outside of the General Ledger rather than utilizing proper General Ledger expenditure and supporting backup information. Cause: General ledger recording, or reconciling procedures were not enforced or completed. Dependable general ledger data was not available. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper financial reporting. Questioned Cost: No Context: During our testing of expenditures, we found no Federal drawdown reimbursement requests selected for testing that did not reconcile to their corresponding expenditures. Repeat of a Prior-Year Finding: Yes, Financial Statement Findings 2021-1 Recommendation: The District should establish a more detailed process for the review and approval of GAAP package Reporting, and grant progress reporting. As part of this process, the individual underlying and supporting worksheets and calculations should be subject to independent challenge, review and approval at a sufficiently detailed level whereas calculation and other errors are prevented and detected in a timely manner. District's Response: The District had originally relied on a consultant accounting professional for recording activity in the general ledger. General ledger activity was not available timely, or in sufficient quality such that the General Manager could rely upon the general ledger to gather information for reporting to grantors. Consequently, the General Manager developed and relied upon their own spreadsheet records for grant reimbursement requests. The district has now incorporated more grant specificity within the general ledger, but the spreadsheet is still being relied upon to calculate and support grant activity. Corrective Action Plan: The District hired a Finance Manager to oversee the day-to-day financial operations of the District. Improvements are ongoing, but will not be sufficient for general ledger based reporting until FY 2022-2023, when it is anticipated that this will allow the activities of the district to be recorded and managed within the general ledger. Planned Implementation Date: July 1, 2022 Responsible Person: General Manager, Umpqua Public Transit District