Finding 1098696 (2024-002)

Item # 2024-002 Prepaid Expenses (Significant Deficiency in Internal Control) Criteria: Under U.S. GAAP, expenses prepaid during the fiscal year should be recorded as an asset on the statement of financial position and amortized through the remainder of the fiscal year to ensure that they are properly stated under the accrual basis of accounting. Condition: During the year under audit, the Organization did not properly reconcile the ending balance of prepaid expenses in the general ledger. Cause: Management did not take the necessary measures to reconcile prepaid expense amounts through the fiscal year to the general ledger to ensure that the ending balance of prepaid expenses was properly stated. Effect: Failure to update internal controls to comply with the requirements of U.S. GAAP could result in material misstatements of prepaid expense balances. Recommendation: The Organization should strengthen its internal control practices by updating its policies and procedures to comply with U.S. GAAP. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout fiscal year 2025 to be in full compliance with U.S. GAAP and the Uniform Guidance. This exercise is anticipated to be complete by the end of fiscal year 2025.