Finding Text
2022-005 Finding
Accounts payable testing and internal controls.
Programs:
Child Nutrition Cluster, ALN #10:555; 10:559
COVID-19 – Elementary & Secondary School Emergency Relief I & II(ESSER) ALN #84.425D
COVID-19 – Elementary & Secondary School Emergency Relief III ARP (ESSER) ALN #84.425U
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding:
None
Criteria:
An effective system of internal control is the responsibility of management. Management should establish
an internal control system that ensures strong financial accountability and safeguarding of assets. This
includes maintenance of accurate accounting records and following the proper purchasing procedures.
Condition:
During our testing of forty (40) invoices, we noted the following exceptions:
1. Invoices were not initialed and dated when received by the district.
2. Invoices are not being cancelled (marked paid) to indicate payment.
3. Three (3) instances of no indication, signature and/or dated by the employee, of receipt of goods
or services.
4. One (1) in the sample where the district did not add the fixed assets purchased to the asset
inventory list.
5. One (1) instance where the purchase order was dated after the invoice date.
Context:
Internal control procedures were tested for accounts payable in the major federal funds.
Cause:
The district did not properly ensure that the accounts payable internal control system was being followed
for all transactions including all purchasing procedures required by the state. Effect:
Without a proper internal control system being in place to ensure accurate accounting records, there is
an increased risk that the financial statements could be misstated.
Questioned Cost:
None
Recommendation:
District should implement policies and procedures to establish an internal control system that will require
accountability with regard to accounts payable and purchasing. This will ensure the proper safeguarding
of assets and accurate accounting records.
Response:
Please refer to the Auditee’s Corrective Action Plan beginning on page 83.