Finding Text
2022-001 Internal Control Over Preparation of Financial Statements, Related Footnote Disclosures, and Schedule of Expenditures of Federal Awards Criteria: Pursuant to SAS 115, Communicating Internal Control Related Matters Identified in an Audit, which affected the Association for the year ended December 31, 2022, we are required to report on whether the Association is able to prepare financial statements, related footnote disclosures, and schedule of expenditures of federal awards (SEFA) in accordance with the cash basis method of accounting. The preparation of financial statements, related footnote disclosures, and schedule of expenditures of federal awards (SEFA) requires internal controls over preventing, detecting and correcting misstatements of the accounting data, and drafting financial statements, related footnote disclosures and SEFA. This finding was also reported as a finding in the December 31, 2021 report.Condition: The Association?s ability to prepare financial statements, related footnote disclosures, and schedule of expenditures of federal awards in accordance with the cash basis method of accounting is based, in part, on its reliance of the external auditors, who cannot by definition be considered part of the Association?s internal controls. Context: The Association has relied on its independent external auditors to assist in the drafting of the financial statements, related footnote disclosures, and schedule of expenditures of federal awards in accordance with the cash basis method of accounting. Effect: With respect to ensuring that there are no misstatements or omissions that would be considered to be significant to the financial statements, related footnote disclosures and SEFA, the Association relies on its external auditors for assistance with the cash basis method of accounting. Cause of Condition: In evaluating the control environment of the Association, we considered the abilities of the Association?s accountant, and though proficient in recording daily transactions, did not demonstrate abilities we considered necessary to prevent, detect and correct misstatements, or the ability to draft the financial statements, related footnote disclosures and SEFA in accordance with the cash basis method of accounting. Recommendation: We recommend that the Board of Directors be aware of the internal control deficiencies over financial reporting. And, if possible, implement procedures to ensure that the Association has the expertise necessary to prevent, detect and correct misstatements and be capable of drafting the financial statements, related footnote disclosures and SEFA in accordance with the cash basis method of accounting. Views of responsible officials and planned corrective actions: The Board believes it has personnel who possess suitable skill, knowledge, or experience to oversee services the auditor provides in assisting with financial statement presentation which requires a lower level of technical knowledge than the competence required to prepare the financial statements, related footnote disclosures and SEFA in accordance with the cash basis of accounting.