Finding Text
Timeliness of Monthly Bank Reconciliations Repeat Finding: This finding was first reported in 2022 (Finding 2022-003). See Section IV: Prior Year Findings for management’s status update. Criteria: A sound system of internal control over financial reporting includes the timely (monthly) reconciliation of bank accounts. Timely reconciliation of the operating account helps maintain accurate financial reporting, ensures transactional discrepancies are identified and corrected promptly and upholds the District’s fiduciary responsibility to taxpayers. Condition: The District’s operating account is reconciled to the corresponding balance in the general ledger. In the absence of formalized policies, this reconciliation is performed when time allows, which during 2023 resulted in delays in the preparation of reconciliation. The District also maintains significant startup cash balances for beach and office tills and processes a high volume of cash receipts as s part of daily operations. Cause: Turnover of critical staff and understaffing in key accounting functions of the District resulted in a prioritization of operating responsibilities over a systematic and timely approach to the reconciliation of the operating account. Additionally, the prior year audit report containing recommendations related to this matter was note issued until January 29, 2025, subsequent to the 2023 reporting period; therefore management did not have the opportunity during the year under audit to implement corrective actions related to this finding. Effect: Although the December 31, 2023 operating account reconciliation was ultimately performed effectively, untimely reconciliations increase the risk that errors, omissions or irregularities in cash transactions may not be identified timely and may result in inaccuracies in financial reporting and incomplete internal financial information. Recommendation: We recommend the District expand the operational capacity of the finance team with additional accounting personnel possessing an understanding of the reporting and compliance frameworks of the District. The District should also strengthen procedures surrounding the timely preparation and review of monthly bank reconciliations and evaluate opportunities to expand noncash payment methods where operationally feasible. Views of Responsible Officials and Planned Corrective Action: Management acknowledges the need to expand the current capacities of the finance team and improve the timeliness of monthly bank reconciliations. The District is in the process of recruiting additional experienced and qualified personnel and implementing procedures to support more timely completion and review of monthly reconciliations.