Finding Text
Throughout the current year audit planning and testing procedures, several accounts were not reconciled to supporting reports which resulted in numerous journal entries. These unreconciled amounts were not initially identified by the Organization?s accounting process and procedures, resulting in adjusting entries to accounts receivable, fixed assets, accrued and other current liabilities, net assets, revenue and various expense accounts. The general ledger detail, as well as the underlying support, is the source from which the Organization?s financial statements and related grant reports are prepared. It is also the basis upon which those charged with governance monitor the Organization?s compliance with applicable regulations and make informed decisions related to the Organization?s ability to achieve its stated purpose. Therefore, the accuracy of the financial records within the general ledger and the related support is fundamental to the Organization?s ability to achieve its stated purpose and to remain in compliance with applicable regulations. We recommend that management follow the internal controls established in its Accounting Policies and Procedures handbook, and consider implementing additional control procedures, including, but not limited to, the following annual and monthly review procedures. Annual Procedures: - Review additions to capitalized assets to ensure proper capitalization or expensing of asset costs in accordance with the Organization?s policy and generally accepted accounting principles. - Implement additional cutoff review procedures at the end of each reporting period to include a review of all purchase orders and invoices outstanding as of year-end to determine whether a liability and expense have been incurred as well as a reconciliation of cash disbursements subsequent to reporting period end to proper inclusion or exclusion from accounts payable ledger as of period end date. - Review any necessary adjustments for accrual-basis accounting, such as accrued payroll, at least annually. - Prepare a complete schedule of expenditures of federal awards on the accrual basis. Monthly Procedures: - Reconcile material accounts, review general ledger activity and create necessary supporting schedules. - Reconcile payment applications from contractors with retainage to ensure proper recording of expenses and contract liabilities. - Review documentation for capitalized expenses to ensure documentation is retained.