Finding Text
Criteria: The Organization is required to have internal controls over the period-end financial reporting process that enable the Organization to record and process year-end journal entries to produce financial records that are in accordance with generally accepted accounting principles. Condition: During our audit, we identified material misstatements related to accounts receivable and fixed assets that were not identified by the Organization’s internal controls over financial reporting. Cause: The Organization failed to provide proper oversight over period-end financial reporting, which resulted in misstated accounting records prior to performance of the audit. Effect: The Organization relied on auditor-prepared accounting adjustments to ensure the financial records were properly stated in accordance with generally accepted accounting principles. The Organization reviewed, approved, and accepted responsibility for the accounting adjustments, as the auditor cannot be a component of the Organization’s internal controls. Recommendation: We recommend management review the period-end financial reporting process and implement an additional analysis of year-end balances prior to the start of the audit. We also recommend additional year-end analysis of accounts receivable and fixed assets to ensure balances are accurately stated. This additional oversight of the year-end financial records should ensure that balances are accurately stated prior to the audit. Management’s Response: Management recognizes the importance of a robust review process. Although the finding recurred from 2023, the surrounding circumstances differ, and previous issues have been addressed. For the current year, additional steps will be taken at year-end to review and confirm status of all pending estates. If the estate has closed the estimated income will be classified as receivable.