Finding Text
SECTION 2 ? FINANCIAL STATEMENT FINDINGS Finding 2022-001 Internal Control over Bank Reconciliation and Vendor Invoice Approval Condition: Bank statements and bank reconciliations were prepared and reviewed by two individuals, but the approval was not documented in writing (or electronic means). Invoices were not defaced prior to payment, review by supervisory personnel not documented and program to be changed for the expenditure was not noted on the invoice, and therefore not approved. Cause: The Organization has developed an internal control documentation but has not a prior audit. They were unaware, even in a small office, that documented procedures by initial and dating (manually or electronically) is required as evidence of segregation of approval duties. Criteria: Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Effect: The supervisory personnel approval of the bank statement, bank reconciliation, vendor invoices and charge to program(s) was not documented. Recommendation: Bank statements and bank reconciliations: Bank reconciliations should be prepared within 30 days of the receipt of the statement. Banks may not correct any errors (or fraud) that is not detected and reported within that time frame. The bank statement and bank reconciliation should be reviewed by a person other than the preparer and that person should initial and date (or electronic procedure of comparable nature) as reviewed and approved. The bank reconciliation balance should agree with the general ledger balance(s). Upon approval of vendor invoices, the invoice should be defaced, and the vendor, amount and program charged should be initialed and dated (or electronic procedure of comparable nature), on the face of the invoice, by supervisory personnel. Management?s response: Management agrees with this recommendation and have taken steps to implement proper review and documentation for bank reconciliations and vendor invoice approvals. Person Responsible: President/CEO, Finance Officer, and Program Managers