Finding Text
Reference Number: 2023-01 Finding: Finding Type: Material Weakness in Internal Control Over Financial Reporting Criteria: An auditee is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Condition: The Organization’s system of internal controls was not sufficiently designed or implemented to ensure that account reconciliations were prepared on an accrual basis and reviewed in a timely and accurate manner. As a result, material audit adjustments were proposed and made to correct misstatements in the financial statements prior to issuance. Cause: The deficiencies resulted from inadequate formalized close procedures, limited supervisory review during the year-end closing process, and staffing changes within the accounting function. Effect: Weaknesses in year-end close procedures increase the risk that material misstatements could occur and not be identified or corrected on a timely basis, resulting in delayed financial reporting and increased audit effort. Recommendation: We recommend management continue efforts to formalize and strengthen monthly and year-end close procedures through the implementation of documented timelines, clearly defined roles and responsibilities, and enhanced supervisory review to promote accurate and timely financial reporting. In addition, the Organization should continue to monitor areas where audit adjustments have occurred to ensure transactions are properly recorded on an accrual basis. Views of Responsible Officials: Management agrees with the finding and recommendation.