Finding Text
Criteria: Timely preparation of account reconciliations is essential to producing accurate and relevant financial reports.
Condition: During the audit a number of adjusting journal entries were proposed by both the audit team and management. These entries were to adjust errors or to reflect year-end accruals.
Cause: Existing closing procedures should be reviewed and updated to ensure that they are properly followed in producing timely reports and reducing year-end adjustments.
Effect: The results were delays in producing reconciliations, account analyses and other financial reports needed by management and the auditors.
Recommendation: We believe that the year-end closing could proceed more quickly by incorporating a closing schedule that indicates who will perform each procedure and when completion of each procedure is due and accomplished. The timing of specific procedures could be coordinated with the timing of management’s or the auditor’s need for information. All reconciliations should be prepared and reviewed by those informed of such matters to ensure accuracy.
Management Response: We acknowledge that the finding identified in the 2023 audit has repeated in the 2024 audit, and we recognize the importance of fully addressing these concerns to ensure more accurate and efficient financial procedures moving forward. We have since successfully hired a qualified staff accountant who is now in place and working diligently to ensure compliance with all financial procedures for the fiscal year 2025. This key hire, along with the enhanced and fully implemented month-end checklist, will help us consistently meet the necessary financial reporting standards.