Finding Text
Adjusting Journal Entries, Required Disclosures and Draft Financial Statements Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to reconciling due to/due from accounts and converting to the full accrual method for GASB 34 purposes. In addition, a draft of the financial statements was prepared by the auditors and reviewed and accepted by the District. Cause and Effect: AU-C Section 265 entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District?s financial statements not conforming to GAAP. Auditor?s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements. In addition, the District should have more of a balance sheet focus throughout the fiscal year, which would decrease the number of adjustments made at year-end. School District?s Response: The district will continue to review and accept proposed adjusting journal entries and footnote disclosures as necessary during the external financial audit. The Assistant Superintendent will collaborate with the District Treasurer in order to develop an increased focus upon the balance sheet throughout the fiscal year.