Finding Text
MONTH END CLOSING-ALN 21.027-FEDERAL PROGRAM-CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS- FEDERAL AGENCY: DEPARTMENT OF THE TREASURY-CRITERIA: CHAPTER 2, PART 200, § 200,303, "ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND THE TERMS AND CONDITIONS OF THE FEDERAL AWARD". ONE COMPONENT OF AN EFFECTIVE INTERNAL CONTROL SYSTEM IS PROPER SUPERVISORY REVIEW AND USE OF CONTROL PROCEDURES TO ENSURE ADEUATE DETAIL OF MONTH END FINANCIAL CLOSE ENSURING ASSETS AND LIABILITIES ARE MAINTAINED AND RECORDED. CONDITION: RECONCILIATIONS OF ACCOUNTS RECEIVABLE, INVENTORY AND CUSTOMER DEPOSITS IN PREPARATION FOR YEAR-END FINANCIAL STATEMENTS REVEALED UNRECONCILED DIFFERENCES BETWEEN THE GENERAL LEDGER AND THE ACCOUNT DETAIL REPORTS. CAUSE AND EFFECT: INADEQUATE CONTROL OVER THE SOFTWARE AND RECONCILIATION TO THE GENERAL LEDGER CAUSED THE UNRECONCILED DIFFERENCES. THE DIFFERENCE IN INVENTORY WAS ADJUSTED BY MANAGEMENT. THE DIFFERENCES IN ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS WERE NOT MATERIAL TO THE FINANCIAL STATEMENTS AND ADJUSTMENTS HAVE BEEN WAIVED. RECOMMENDATION: I RECOMMEND THE AUTHORITY REVIEW ITS POLICIES AND SOFTWARE UTILIZED TO ACCOUNT FOR THE BALANCE SHEET ITEMS. MONTHLY RECONCILIATION OF INVENTORY, ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSIT DETAILS TO THE GENERAL LEDGER IS A KEY COMPONENT TO INTERNAL CONTROL. RESPONSIBLE OFFICIAL'S RESPONSE: MANAGEMENT WILL WORK WITH THE SOFTWARE COMPANY AND EMPLOYEES TO IMPLEMENT PROCEDURES TO ENSURE MONTHLY RECONCILIATIONS OF BALANCE SHEET ITEMS.