Finding Text
Finding 2025-01, Repeat Finding 2024-01 Significant Deficiency – Material adjusting entries, Condition: During the year ended September 30, 2025 multiple material adjusting entries were recorded. Material journal entries included a correction to amounts recognized as revenue and receivable as related to sales tax revenue in the amount of $594,760 , and a correction to revenue and receivable related to amounts reimbursed by grantors in the amount of $1,240,079. Additional material journal entries were made to record fixed asset additions and depreciation expense in the amount of $879,563, to record prepaid rent in the amount of $122,032 and to properly record accounts payable, expense and cash in the amount of $1,089,476. Criteria: Revenue and receivables should be recorded as earned, when measurable and available. Expense and payables should be recorded when the goods or services are received or incurred. Cause: Invoices and related contracts were not properly reviewed and evaluated to determine the proper recording of amounts paid. Revenues were not accrued properly through year end. Effect: The District recorded correcting entries to receivable, revenue, depreciation, accumulated depreciation, accounts payable, capital outlay, cash and various other expense accounts. Recommendation: The District should review and evaluate invoices and related contracts to ensure proper recording of payments and accrual of revenues through year end. Bank reconciliations should be prepared each month and in a timely manner. Transactions marked as cleared on the bank reconciliation should be carefully compared to transactions that cleared the bank. Outstanding items should be reviewed for reasonableness. Differences should be corrected so that there are no significant bank reconciliation adjustments