Finding Text
Finding 2021-002 – Delinquent filing Condition The Corporation’s monthly reconciliation and financial close processes were not performed timely which resulted in significant delays in performing the audit. Criteria Effective internal control over financial reporting requires management to maintain a structured monthly close process and to perform periodic reconciliations that support the general ledger in a timely manner. Cause and Effect These conditions were primarily attributable to significant turnover during the year, which reduced the Corporation’s capacity to perform reconciliations and execute the monthly close in a timely manner. As a result, controls over the financial close process were not performed timely, increasing the risk that misstatements or omissions would not be identified and corrected. The delay in closing the 2021 books indicates that financial information used for operational and governance decisions may have been incomplete or inaccurate, which increases overall business risk to the Corporation. Recommendation We recommend the Corporation continue strengthening and formalizing its reconciliation and monthly close procedures. Reconciliations of information to the general ledger should be performed on a recurring basis, differences should be researched and resolved promptly, and significant accounts should be evaluated for completeness and accuracy before the close is finalized. Views of Responsible Officials and Planned Corrective Action Responsible officials indicated that turnover during the year contributed to delays and inconsistencies in completing reconciliations and monthly close activities. Management has already made changes in personnel by adding increased expertise and experience to the personnel assigned to oversee these duties. Management plans to continue formalizing reconciliation and close procedures, improve the consistency and timeliness of account review and resolution of reconciling items. Management also has a plan to complete all outstanding audits as soon as possible.