Core Issue: The Agency is not preparing its own annual financial statements or disclosures, relying instead on the auditor for these tasks.
Impacted Requirements: Internal controls are insufficient, as the auditor's involvement in preparation could compromise their independence.
Recommended Follow-Up: The Agency should either enhance its in-house capabilities to prepare financial statements or consider hiring an external service to ensure compliance and maintain control integrity.
Finding Text
The Agency does not prepare its annual financial statements or note disclosures. The Agency staff works with the auditor in the preparation and subsequently reviews and approves the financial statements and note disclosures before issuance. Internal controls should be in place that provide reasonable assurance that the financial statements are free of material misstatements and that the independent auditor is not part of this control system. The Agency staff does not have time to prepare the Agency's financial statements efficiently. The Agency relies on the auditor to prepare the financial statements and the note disclosures and then the Agency review's the final product. Caution must be exercised so that the auditor is not deemed to be part of the control system. The Agency can accept this condition and concentrate on the review and approval process or prepare all financial statements and note disclosures in house or hire an outside source to prepare the financial statements and note disclosure.
Corrective Action Plan
Although multiple attempts were made between 2015-2019 to acquire outside CPA to conduct this function, we have found the expertise locally unavailable due to unwillingness of local CPAs to do this work.