Finding 14478 (2022-002)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-06-20

AI Summary

  • Core Issue: Weak controls over financial reporting led to necessary material adjustments to avoid misstated financial statements.
  • Impacted Requirements: Management must ensure accounts are reconciled regularly to comply with Generally Accepted Accounting Principles.
  • Recommended Follow-Up: Implement monthly reconciliations and document necessary accounting procedures to proactively identify needed adjustments.

Finding Text

Material Adjustments Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles. Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Entity?s financial statements from being materially misstated. Context/Cause: The Entity relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit. Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports. Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required. Auditee?s Response: The Entity will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.

Corrective Action Plan

Material Adjustments Description of Finding: The auditor found that The Entity relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit. Statement of Concurrence or Nonconcurrence: Management concurs with this finding. Corrective Action: The Entity will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements, and increase the accuracy of interim financial reports used by management.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 14477 2022-001
    Material Weakness
  • 14479 2022-003
    -
  • 14480 2022-001
    Material Weakness
  • 14481 2022-002
    Material Weakness
  • 14482 2022-003
    -
  • 590919 2022-001
    Material Weakness
  • 590920 2022-002
    Material Weakness
  • 590921 2022-003
    -
  • 590922 2022-001
    Material Weakness
  • 590923 2022-002
    Material Weakness
  • 590924 2022-003
    -

Programs in Audit

ALN Program Name Expenditures
10.760 Water and Waste Disposal Systems for Rural Communities $114,014