Finding Text
Criteria: Management is responsible for establishing and maintaining internal controls and for the fair presentation of financial position, change in net assets, and disclosures in the financial statements and the schedule of expenditures of federal and state awards, in conformity with U.S. Generally Accepted Accounting Principles (GAAP). Cause: During our audit, we noted that although the Organization’s employees are capable of recording cash receipts and disbursements, there is not the expertise to accrue proper amounts and to prepare the annual audited financial statements and the related disclosures and the schedule of expenditures of federal and state awards in accordance with GAAP. Condition: Management requested that KerberRose SC assist in preparing a draft of the audited financial statements, including the related footnote disclosures and the schedule of expenditures of federal and state awards. The outsourcing is a result of management’s cost/benefit decision to use our accounting expertise rather than incurring this internal resource cost. Effect: Although the auditors are proposing the necessary adjustments to convert the general ledger to accrual and also preparing the financial statements and related footnotes and the schedule of expenditures of federal and state awards, management of the Organization thoroughly reviews them and accepts responsibility for their completeness and accuracy. Recommendation: We recommend that management continue to make this decision on a cost/benefit basis. Management’s Response: The Organization will continue to rely on the outside assistance of their auditors in this area because it is the most cost-effective solution.