Finding Text
Criteria - The inability to report financial data reliably in accordance with accounting principles generally accepted in the United States of (GAAP) is considered to be an internal control deficiency. Condition - The Company’s internal control over financial reporting extends through completion of the general ledger, but not to preparation of GAAP compliant financial statements and notes. As auditors, we were requested to draft the financial statements, and the accompanying notes to the financial statements. The auditors believe, in the auditors’ judgment, the Company does possess the necessary expertise to prepare the financial statements but has chosen to engage the auditors to perform this component service. Cause - Management and those charged with governance have accepted this condition because of cost. Effect - As a result of not having an individual on staff to prepare GAAP basis financial statements, the Company has an internal control deficiency. Recommendation - We recommend that management and those charged with governance continue to oversee and accept responsibility for the financial statement preparation services.