Finding 1106731 (2024-003)

Significant Deficiency
Requirement
L
Questioned Costs
-
Year
2024
Accepted
2025-03-26

AI Summary

  • Core Issue: Some transactions were incorrectly charged to expense accounts instead of being capitalized as fixed assets, and vice versa.
  • Impacted Requirements: This misclassification violates generally accepted accounting principles and Philippian Garden’s policy of capitalizing costs over $1,000 with a useful life exceeding one year.
  • Recommended Follow-Up: Management should ensure proper capitalization of fixed assets according to established policies to maintain accurate financial statements.

Finding Text

Capitalization of Fixed Assets Our audit revealed that there several transactions were charged to an expense account that should have been capitalized as a fixed asset and several transactions that were capitalized that should have been expensed. Generally accepted accounting principles allows for capitalization of costs if the organization anticipates receiving future benefits from such assets. Philippian Garden’s policy is to capitalize initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. This occurred due to management oversight. Failure to properly capitalize fixed assets may cause the financial statements to be inaccurate. Recommendation We recommend that the management capitalize fixed assets in accordance with established policies.

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 530283 2024-001
    Material Weakness
  • 530284 2024-002
    Material Weakness
  • 530285 2024-003
    Significant Deficiency
  • 530286 2024-004
    Significant Deficiency
  • 530287 2024-001
    Material Weakness
  • 530288 2024-002
    Material Weakness
  • 530289 2024-003
    Significant Deficiency
  • 530290 2024-004
    Significant Deficiency
  • 1106725 2024-001
    Material Weakness
  • 1106726 2024-002
    Material Weakness
  • 1106727 2024-003
    Significant Deficiency
  • 1106728 2024-004
    Significant Deficiency
  • 1106729 2024-001
    Material Weakness
  • 1106730 2024-002
    Material Weakness
  • 1106732 2024-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $3.56M
14.195 Project-Based Rental Assistance (pbra) $267,334