Finding 1088876 (2024-001)

Finding 2024-001: Internal Control Over Financial Reporting Criteria and Condition: Internal controls over financial reporting should be designed and in place to prevent, detect, and correct material misstatement in the financial statements in a timely manner. The internal controls were unable to prevent, detect, and correct a material error in the preparation of the financial statements as of and for the year ended February 29, 2024, in a timely manner. This resulted in resulted in a significant adjustment related to assets and expenses. Cause: Existing internal controls over financial reporting require that management perform meaningful analysis of internal records and general ledger accounts on a regular basis. Managements analysis of the allowance for credit losses and credit loss expense was not substantive enough which results in financial statements that contain a material error. Questioned Costs: None Recommendations: We recommend that management improve upon established internal controls related to review of accounts receivable and the allowance for credit losses to ensure the estimate is adequate going forward. Views of Responsible Officials and Planned Corrective Actions: Management is taking steps to improve their analysis of the allowance for credit losses to ensure it is adequate for all future periods.