Finding Text
Finding 2022-001: Financial Reporting
Finding Type: Material Weakness
Criteria: Government Auditing Standards require that financial statements be prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”). These principles require financial statements be prepared on the accrual basis of accounting, which is GAAP compliant; revenues and expenses are recorded and recognized in the period in which they occur.
Condition and Context: Several material adjusting journal entries were needed to bring the Center’s financial statements into accordance with GAAP.
Cause: Significant turnover within the finance department, lack of document retention and various clerical errors resulted in several material misstatements identified during the audit process.
Effect or Potential Effect: Because of the above issues, the Center’s financial statements were materially misstated for the years ending December 31, 2022 and 2021. Subsequent adjustments resulted in changes to the trial balances provided.
Questioned Costs: None
Recommendation: The Center should implement stronger processes and related internal controls surrounding financial reporting. It should address employee retention within the finance department and evaluate opportunities to implement technology to streamline processes.
Planned Implementation Date of Corrective Action: June 2024
Person Responsible for Corrective Action: Chief Financial Officer