Finding Text
Finding 2024-01: Improper classification of transactions in general ledger software Criteria: According to generally accepted accounting principles (GAAP), financial transactions must be accurately classified to reflect the true nature of each transaction. Condition: The audit identified several instances where expenses were classified as capital expenditures, and revenue transactions were incorrectly recorded as liabilities. These misclassifications resulted in inaccurate financial statements and misstated financial positions. Cause: The improper classification of transactions was due to insufficient oversight by management. Effect: The misclassification of transactions led to inaccurate financial statements, affecting decision-making and stakeholder confidence. Recommendation: UMARC management should implement robust review and approval procedures for financial transactions to ensure accurate classification. Questioned Costs $24,125 Auditee Response: Management concurs with the finding. We have passed the relevant adjustments to correct the misclassification in our FY24 financial statements. We will also update our accounting policies and procedures Per the Audit recommendation. The adjusted financial statements will be submitted to the federal awarding agency by the end of March 2025.