Finding Text
Condition: During our current year-end audit procedures, we found that the bank reconciliations were not
being performed timely. One of the most important internal control features over cash receipts and
disbursements is the preparation of the monthly bank reconciliation. By not preparing monthly bank
reconciliation’s, errors and omissions may occur and not be detected on a timely basis.
Internal control is most effective when bank reconciliations are prepared immediately upon receipt of the
monthly bank statement. The bank statement should be received unopened by an individual not
responsible for writing checks or recording cash receipts and disbursement transactions. Internal control
is stronger when someone not responsible for entries in the receipts and disbursements records prepares
the bank reconciliation.
Criteria: A good system of internal controls would reconcile all cash accounts on a monthly basis.
Reconciliations should reconcile between bank and general ledger balances should be prepared to
determine all cash transactions have been properly recorded.
Cause: Lack of oversight by the City an inadequate controls over the bank reconciliation process.
Effect: Misstated cash balances and an accumulation of unreconciled errors.
Recommendation: We recommend as a means of better control, that bank reconciliations be performed
each month and any variances be investigated and adjusted immediately.