Finding Text
Criteria: The Organization is required to have internal controls in place that enable it to prepare complete financial statements, including note disclosures, in compliance with generally accepted accounting principles. Condition: Management was unable to prepare draft financial statements, including the related notes to the financial statements. Cause: The Organization lacks personnel with the expertise to apply generally accepted accounting principles in preparing its financial statements, including note disclosures, and thus, does not have the internal control procedures required to draft the financial statements and related notes in conformity with generally accepted accounting principles. Effect: Management engaged the auditor to prepare draft financial statements, including the related notes to the financial statements. Management reviewed, approved, and accepted responsibility for the financial statements prior to their issuance. Recommendation: We recommend management review the costs and benefits involved to retain a consultant with the required expertise to prepare the financial statements or review the financial statements as prepared by the auditor for compliance with generally accepted accounting principles. Management’s Response: Management has determined that, as in prior years, it is more cost effective to continue engaging the auditor to draft the financial statements and accompanying notes.