Finding Text
2025-003 Cash and Investment Account Balances Do Not Reconcile to the Financial Statements Criteria: Internal controls require that all cash accounts be reconciled monthly on a timely basis, with all reconciling items (outstanding checks, deposits in transit, bank errors, unrecorded transactions, etc.) properly identified, investigated, and recorded in the general ledger so that the reconciled balance agrees with the financial statements. Condition: During the audit of cash and investments as of Fiscal Year Ending September 30, 2025, we noted that the bank reconciliations for the accounts showed a total reconciled account balance of $1,911,869, while the Unaudited FDS balance reflected $2,373,781. The difference of $461,912 was not properly investigated, adjusted, or explained. Questioned Costs: $461,912 Effect: Misstatement of cash and investment balances in the financial statements, as well as an increased risk of undetected errors. Cause: Lack of prior management oversight. Recommendation: Perform an investigation and correction of the current reconciling differences and record the appropriate adjusting journal entries. The housing authority should also implement a monthly cash reconciliation process that ensures the final reconciled balance fully agrees with the general ledger.