Finding Text
Finding #2022-002 – Material Audit Adjustments
Condition: The District does not have management personnel with the necessary expertise to prepare the financial statements and related notes in accordance with generally accepted accounting principles. Due to limited resources, management has decided to accept certain risks relevant to financial reporting and relies on the auditors to assist with the preparation of the District’s financial statements, including the recording of material audit adjustments. During their audit procedures, the auditors proposed audit adjustments that, if not made, would have resulted in the financial statements being materially misstated.
Effect: The District’s system of internal control may not prevent, detect, or correct misstatements in the financial statements.
Cause: The District does not prepare the financial statements and related notes.
Criteria: Proper financial closing and year-end reconciliation procedures should be in place to identify and adjust the financial records to ensure the financial statements are fairly stated.
Recommendation: The auditor will continue to work with the District, providing information and training where needed, to make the District’s personnel more knowledgeable about its responsibility for the financial statements. The auditor recommends that the District review the various yearend processes and transactions necessary to close the financial records.
Response: The District acknowledges their responsibility for the financial statements and recording of current year activity. Going forward, the District will work with its bookkeeper to verify that all activity is completely and accurately recorded in the financial records and reflected on the financial statements.