Finding 1223239 (2023-004)

Material Weakness Repeat Finding
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2026-07-08

AI Summary

  • Core Issue: The Fund lacks sufficient internal resources to prepare GAAP-compliant financial statements.
  • Impacted Requirements: Internal controls over financial reporting are inadequate, increasing the risk of errors in financial statements.
  • Recommended Follow-Up: Management should stay informed about financial reporting requirements and regularly review and approve the financial statements.

Finding Text

Financial Statement Finding - PREPARATION OF GAAP BASED FINANCIAL STATEMENTS Criteria: Internal controls over financial reporting include those related to the actual preparation and review of the audited financial statements in conformity with generally accepted accounting principles (GAAP). Condition: The Fund has limited internal resources to prepare full-disclosure financial statements required by GAAP. Cause: Management has elected to have the financial statements and the related notes to the financial statements prepared by the independent auditor as part of the audit. Effect: Inadequate controls over financial reporting of the Fund could result in the likelihood that the Fund would not be able to prepare the financial statements and the related notes to the financial statements without the assistance of the auditors. Recommendation: For entities of the Fund’s size, it generally is not practical to obtain the internal expertise to handle all aspects of the external financial reporting. Management should continually be aware of the financial reporting requirements and should review and approve the completed financial statements. Views of Responsible Officials and Planned Corrective Actions The Fund’s management is aware of this significant deficiency and addresses it by obtaining our assistance in the preparation of the Fund’s annual financial statements. Management reviews and approves the completed statements and distributes them to the users.

Corrective Action Plan

Management agrees with this finding. The Fund has historically relied on independent auditors to assist with drafting the annual financial statements and note disclosures in accordance with GAAP due to limited internal accounting resources. While management expects to continue relying on the auditors for drafting assistance in the near term, management will strengthen its internal review and approval process over financial reporting. This will include additional training for accounting personnel and management, use of financial statement disclosure checklists, and more formal review by management and those charged with governance before issuance. Corrective action plan: • Designate a member of management to serve as the internal financial reporting coordinator for the annual audit and reporting process. • Obtain training for accounting and management personnel on GAAP financial statement presentation, note disclosure requirements, and key year-end reporting areas relevant to the Fund. • Use an annual financial statement review checklist to evaluate the draft statements, note disclosures, and required supplementary information, if any. • Require documented management review and approval of the final financial statements and related notes before issuance. • Provide the Board of Directors or designated governance committee with an opportunity to review the audited financial statements and significant disclosures. Responsible party/role: General Manager and Business Office Manager, with governance oversight by the Board of Directors. Implementation timeline: The enhanced review process will be implemented for the next annual financial reporting cycle and no later than the preparation of the financial statements for the year ending September 30, 2026. Training and checklist development will occur by June 30, 2026.

Categories

Reporting Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1223236 2023-001
    Material Weakness Repeat
  • 1223237 2023-002
    Material Weakness Repeat
  • 1223238 2023-003
    Material Weakness Repeat
  • 1223240 2023-005
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
11.029 TRIBAL BROADBAND CONNECTIVITY PROGRAM $3.43M
21.029 CORONAVIRUS CAPITAL PROJECTS FUND $205,201
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $167,504