Finding Text
Timely Financial Close and Reconciliation of Accounts to Supporting Documents - Criteria:The Association should timely reconcile the general ledger accounts for cash, accounts receivable, accounts payable, and accrued expenses to supporting documentation and subsidiary ledgers on a monthly basis and at year-end. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. Condition and Cause:The auditors experienced significant difficulties in the performance of the audit due to delays by the Association’s management in the timing of audit readiness as a result of the delay in closing the books at year end. The results were delays in producing closing journal entries, trial balances, schedules, reconciliations, account analyses and other financial reports needed by management and the auditors. Additionally, there were significant differences in the general ledger account balances and the subsidiary ledgers and supporting documentation for various accounts including cash, accounts receivable, accounts payable, and accrued expenses. Effect:Errors in revenue and expense recognition occurred, resulting in overstatements and understatements in the account balances for the associated asset and liability accounts.Recommendation: We recommend enhanced controls and procedures over the financial control process be implemented. The Association should utilize accounting personnel with the proper accounting knowledge and accounting skills to prepare account reconciliations, and the Chief Financial Officer should perform a review of the account reconciliations, accounting adjustments, and financial presentation.