Finding Text
Material Weakness in Internal Control Over Financial Reporting – Untimely Closing of Books Criteria – According to best practices in financial reporting and accounting standards, including GAAP (Generally Accepted Accounting Principles), financial records should be closed promptly—typically within 30 to 45 days after the end of the reporting period. Timely closing ensures accurate, complete, and relevant financial information is available for decision-making and reporting to stakeholders. Condition—The organization failed to close its books within the timeframe for the fiscal year ending September 30, 2023. Several accounts were not adequately reconciled from prior years, which delayed the finalized financial statements 10 months past the deadline. Cause—The delays were due to insufficient staffing, a change in accounting leadership, inadequate closing procedures, and delays in information such as the 211 Glendale Promissory Information. Effect – The untimely closing process resulted in inaccurate interim financial reports shared with the board and increased audit risk, as late adjustments and reconciliations may compromise the reliability of financial data. Recommendation—We recommend developing and implementing a financial close calendar, automating key processes, hiring and training additional staff, and conducting monthly close reviews.