Finding 22091 (2022-004)

2022-004 INTERNAL CONTROL OVER SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS PREPARATION AND REVIEW Criteria As described in our engagement letter, management is responsible for establishing and maintaining internal controls, including monitoring, and for the fair presentation of the schedule of expenditures of federal awards, including the notes to the schedule of expenditures of federal awards, in conformity with the accrual basis of accounting. Condition Management is responsible for establishing and maintaining internal control and for the fair presentation of the schedule of expenditures of federal awards, in conformity with the accounting principles generally accepted in the United States of America. The Authority does not have a system of internal control that would provide management with reasonable assurance that the Authority's schedule of expenditures of federal awards and related disclosures are complete and presented in accordance with the accrual basis of accounting. As such, management requested us to prepare a draft of the schedule of expenditures of federal awards, including the related note disclosures. Cause Management does not prepare the schedule of expenditures of federal awards in accordance with the accrual basis of accounting. Potential Effect The potential exists that a material misstatement of the schedule of expenditures of federal awards could occur and not be prevented or detected by the Authority's internal control. Recommendation We recommend that the Authority review and approve the proposed auditor adjusting entries and the adequacy of schedule of the expenditures of federal awards disclosures prepared by the auditors and apply analytic procedures to the draft financial statements, among other procedures as considered necessary by management. Management's Response The Authority relies on the auditor to propose adjustments necessary to prepare the schedule of expenditures of federal awards including the related note disclosures. The Authority reviews schedule of expenditures of federal awards and approves all adjustments.