Finding Text
Finding 2024-001: Significant Deficiency: Financial Reporting
Criteria: Generally accepted accounting principles, under Accounting Standards Codification Topic (ASC) 842, requires that entities recognize material leases as a liability and a right-of-use asset on the balance sheet.
Condition: During the audit, we noted that the accounting for right-of-use assets and related liabilities under ASC 842 was not accurate.
Effect or potential effect: The Credit Union’s assets and liabilities were understated by approximately $3.6 million. There was no effect on net income.
Recommendation: Implement the necessary procedures and calculations to accurately record the liability and right-of-use asset on the balance sheet.
Questioned costs: None.
Views of responsible officials: Management agrees with the finding and has contracted with a third-party to assistance with the software used to account for leases under the requirements of ASC 842.