Finding Text
Criteria: Under generally accepted accounting principles and sound financial management practices, all bank accounts should be reconciled on a monthly basis, with reconciliations reviewed timely and retained as part of the accounting records. Condition: The entity was unable to provide bank reconciliations for any month during the audit period for the payroll cash account. No evidence was available to demonstrate that reconciliations were prepared, reviewed, or retained. Cause: The entity did not have adequate procedures in place to ensure that all payroll account bank statements were properly prepared, reviewed and reconciled. Effect: Without regular bank reconciliations, the entity cannot ensure that payroll cash transactions are accurately recorded or that errors or irregularities would be detected and corrected in a timely manner. This increases the risk of misstatements in the financial statements and undermines the reliability of reported cash balances. Recommendation: The entity should implement procedures to ensure that all bank reconciliations for all cash accounts are completed accurately and in a timely fashion. Management’s Response: Management agrees with the finding and has engaged an accounting firm to complete and maintain monthly bank reconciliations.