Finding Text
2024 – 001 Material Audit Adjustments and Financial Statement Preparation
Type of Finding:
Material Weakness in Internal Control over Financial Reporting
Condition: During the course of the audit, we proposed significant audit adjustments. In addition, University does not have an internal control policy in place over annual financial reporting that would enable management to prepare its annual financial statements and related footnote disclosures to ensure they are complete and presented in accordance with GAAP.
Criteria or specific requirement: Management is responsible for the accuracy and completeness of all financial records and related information, including adjusting the financial statements to correct material misstatements and produce accurate financial statements on a timely basis. Management is also responsible for establishing and maintaining internal controls for the fair presentation in the financial statements, including disclosures in accordance with GAAP.
Effect: Material adjustments were proposed and subsequently recorded by management. The lack of sufficient controls over year-end reporting increases the likelihood that a material misstatement would not be prevented or detected.
Cause: The University has a limited number of personnel with limited financial reporting experience. The University relied on the audit firm to prepare the annual financial statements and related footnote disclosures, in particular those that relate to the presentation of the discontinued operations accounting. However, they have reviewed and approved the annual financial statements and the related footnote disclosures.
Recommendation: We recommend management enhance the internal controls over financial reporting. Year-end closing procedures should be expanded to ensure all transactions have been accounted for, appropriate accounting standards have been applied.
Views of responsible officials: There is no disagreement with the audit finding.