Finding Text
Internal Control Impact: Material Weakness
Repeat Finding: No
Questioned Costs: None
Criteria: Boys & Girls Clubs of Central Georgia, Inc., (“ the Organization”) management is responsible for having internal controls and procedures in place to accurately report the results of its operations, close its books, and properly prepare the financial statements in accordance with GAAP. This includes properly recognizing expenses and revenues in the proper period on the accrual basis of accounting.
Condition: The lack of appropriate policies, procedures, and internal control processes led to a failure to accurately record financial information in the proper period and material audit adjusting entries.
During the audit, auditor proposed adjusting journal entries were posted for the following: Adjusting cash accounts to their reconciled amounts, correcting accounts receivable to amounts earned but not yet received as of year-end, capitalizing fixed asset additions, calculating depreciation expense, correcting accounts payable and accrued payroll to amounts due and payable as of year-end, and adjusting contributions in kind revenue and expenses to their proper amount.
Cause: The Organization has experienced turnover in its accounting department function. This has led to a failure to establish adequate internal control processes to detect and prevent inaccurate financial reporting.
Effect: Insufficient internal controls over financial reporting could result in accounting errors or material misstatement due to error or fraud.
Recommendation: Marshall Jones recommends that the Organization receive additional assistance in improving their financial reporting processes from individuals who are familiar with GAAP. Marshall Jones also recommends that management establish policies and procedures to ensure that management level reviews of monthly and annual financial information are performed on a timely basis.
Views of Responsible
Officials: Management of the School acknowledges the finding. Please refer to the Corrective Action Plan.