Finding Text
Condition: The financial statements and the Financial Data Schedule submitted to REAC had several material misstatements and were not prepared in accordance with generally accepted accounting principles (GAAP). Criteria: Internal controls should be in place to ensure that financial statements are prepared materially free from errors. Context: During our review of the financial statements, we noted the following issues that were inconsistent in the preparation of the financial statements and the Financial Data Schedule: materials inventory was not adjusted at year end; accrued leave was not adjusted at year end; accounts payables were not accrued as of the year end; principal payments related to the RD mortgage were not recorded; the voiding of outstanding checks totaling approximately $35,000 was not recorded; payroll entries were posted into non payroll accounts; GASB 68 pension entry not recorded; prior year audit adjustments were not recorded. Effect: The misstatement of account balances resulted in the preparation of financial statements with material errors. The financial statements could not be relied upon for the fair presentation of the financial position of the Authority. Recommendation: It is recommended that proper internal controls be established to ensure proper processsing and reporting of financial statements materially free from errors. Response: We will implement internal controls to follow up with the fee accountant at fiscal year-end to be certain they are preparing materials in accordance with generally accepted accounting principles (GAAP).