Finding Text
Internal Control Over Financial Reporting - Internal Control Evidence
Criteria or Specific Requirement: Internal controls should be in place that provide reasonable
assurance that transactions are reviewed and approved. This is critically important for grant
funding to assure that expenditures incurred are allowable grant costs.
Condition: During the audit, transactions tested for payroll and journal entries lacked evidence of
review and approval by others. Although management represents that timesheets were reviewed
by a supervisor during the period under audit, the samples we observed did not have evidence of
supervisor approval. Management also represented that journal entries were reviewed and
approved, however the supporting documentation provided to us lacked evidence of approvals.
Effect: A material weakness in internal control over financial reporting exists due to the lack of
documentation of internal control processes.
Cause: NIBC transitioned their accounting function from an outsourced model to utilizing in-house
staffing which resulted in the loss off approval documentation maintained by the outsourced
accountant.
Auditor's Recommendation: We recommend NIBC implement procedures to ensure
documentation of approvals is retained.