Finding Text
Significant Deficiency 2024-1 – Internal Control Over Financial Reporting Criteria: Statement on Auditing Standards No. 112, “Communicating Internal Control Related Matters Identified in an Audit” is applicable. The financial records revisions made during the audit process constitute a significant deficiency in internal control under auditing standards. Condition: Under current professional standards, the Town is responsible for the internal control process which includes the preparation of financial statements in accordance with generally accepted accounting principles. This preparation of materially accurate financial statements will help the Town to prevent, detect and correct potential misstatements in the financial statements or footnotes. During the audit process, material adjustments were made to the Town’s financial records. Cause: Management responsible for the accounting and recording function did not possess the proper training and experience. Effect: During the audit process, material audit adjusting entries were required so as to fairly state certain general ledger accounts. Questioned Costs: None Recommendation: The Town should seek to improve the review process for all entries to be reflected in the financial statements. The Town should employ individuals with the skill, knowledge, and experience to thoroughly review and accept responsibility for proposed journal entries and the financial statements. Views of Responsible Officials: The Town agrees with this finding.