Finding Text
Criteria: Expense was not recognized in accordance with generally accepted accounting principles. Condition and Context: Expense was not properly recognized in the period the expense was incurred. Bank transactions were recorded into another cash account instead of being expensed, which overstated the current year change in net position. Effect: Expense was not recognized in the appropriate period. Management has corrected as a result of the audit. Cause: Accounting records are maintained on a cash basis throughout the year. Control procedures were not implemented to ensure adjustments to recognize activity in the appropriate period. Recommendation: Implement procedures and related controls to ensure transactions are made to recognize activity when expense is incurred. Correcting journal entries, if any, should be made timely and financial records should agree to the audited financial statements. Management Response: Management agrees with finding. Procedures are being implemented to ensure appropriate recognition, see attached corrective action plan.