Finding 1174994 (2025-005)

INTERNAL CONTROL OVER SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS PREPARATION AND REVIEW: CRITERIA: As described in our engagement letter, management is responsible for establishing and maintaining internal controls, including monitoring, and for the fair presentation of financial statements, including the notes to the financial statements, in conformity with the modified cash basis of accounting. CONDITION: The District does not have a system of internal control that would provide management with reasonable assurance that the District's schedule of expenditures of federal awards and related disclosures are complete and presented in accordance with the modified cash basis of accounting. As such, managment requested the auditors to complie the trial balance from the general ledger and prepare a draft of the schedule of expenditures of federal awards, including the realted note disclosures. CAUSE: Managment does not prepare the schedule of expenditures of federal awards in accordance with the modified cash basis of accounting. POTENTIAL EFFECT: The potential exists that a material misstatement of schedule of expenditures of federal awards could occur and not be prevented or detected by the District's internal control. RECOMMENDATION: The auditors recommend that the District review and approve the propsed auditor adjusting entries and the adequacy of the schedule of the expenditures of federal awards disclosures prepared by the auditors and apply analytic procedures to the draft financial statements, among other procedures as consisered necessary by management.