Finding Text
Auditor Preparation of the Financial Statements
Material Weakness
Criteria: Management is responsible for establishing and maintaining internal controls,
including monitoring, and for the fair presentation in the financial statements of financial
position, results of operations, and cash flows, including the notes to financial statements, in
conformity with U.S. generally accepted accounting principles.
Condition: As part of the audit, management requested the auditor to prepare a draft of the
financial statements, including the related notes to financial statements and supplementary
information. Generally Accepted Auditing Standards require auditors to report it as a finding
when they prepare the complete annual reporting package for their clients. Management
reviewed, approved, and accepted responsibility for those financial statements prior to their
issuance.
Cause: This deficiency is partially due to limited resources in the financial reporting process.
Auditor assistance with preparation of the schedule of expenditures of federal awards is not
unusual in an organization of this size.
Effect: There is a reasonable possibility that the Organization would not be able to draft a
complete and accurate financial statements.
Recommendation: We recommend that Management continue to evaluate the cost benefit
of preparing a draft of the audited financial statements, supplemental schedules, and
disclosures.
Managements Response: Management will continue to allow the audit firm to create the draft
financial statements and related footnote disclosures, and will review and approve these prior to the
issuance of the annual financial statements.