Finding 366877 (2022-002)

Material Weakness

Requirement

Questioned Costs

Year

2022

Accepted

2024-02-12

Audit: 289978

Organization: Village of Tennyson, Wisconsin (WI)

Auditor: Johnson Block & Company INC

AI Summary

Core Issue: The Village has a material weakness in internal controls due to not recording necessary adjustments before the audit.
Impacted Requirements: Internal controls require that all material adjusting journal entries be prepared prior to the audit.
Recommended Follow-Up: Implement policies and procedures to ensure timely and accurate recording of all transactions in the general ledger.

Finding Text

Finding #2022-002 – Material Adjustments Condition: Johnson Block and Company, Inc. proposed adjusting journal entries during the audit process. We deem these entries to be material in relation to the financial statements. Since the Village did not make these adjustments in its accounting system prior to the audit, a material weakness exists in the Village’s internal controls. Criteria: Material adjusting journal entries not prepared by the Village before the audit are considered an internal control weakness. Cause: The Village does not have policies and procedures in place to ensure that all transactions are properly recorded on the general ledger prior to the audit. Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner. Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner. Response: The Village will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.

Corrective Action Plan

Preparation of Financial Statements and Schedules of Expenditures of Federal and State Awards Condition: Village staff does not prepare the financial statements and schedules of federal and state awards. The Village has designated an individual responsible for reviewing and accepting the financial statements and schedules of federal and state awards. Criteria: Internal controls over preparation of the financial statements and schedules of federal and state awards, should be in place to provide reasonable assurance that a misstatement would be prevented or detected. Cause: The Village does not prepare the financial statements and full schedules of federal and state awards. Effect: Because management relies on the auditor to assist with the preparation of the financial statements and schedules of federal and state awards, the Village’s system of internal control may not prevent, detect, or correct misstatements in the financial statements and schedules of federal and state awards. Recommendation: The auditors will work with the Village to make personnel more knowledgeable about its responsibility for the financial statements and schedules of federal and state awards. Response: The auditors prepare the financial statements and schedules of federal and state awards, but we review and accept prior to issuance. We prepare financial reports that are reviewed by the Village Board monthly. Any concerns or questions are addressed throughout the year. Contact Person: Lynn Yager, Clerk/Treasurer Anticipated Completion: Not Applicable

Other Findings in this Audit

366876 2022-001

Material Weakness
366878 2022-003

Material Weakness
943318 2022-001

Material Weakness
943319 2022-002

Material Weakness
943320 2022-003

Material Weakness

Programs in Audit

ALN	Program Name	Expenditures
10.760	Water and Waste Disposal Systems for Rural Communities	$1.35M
21.027	Coronavirus State and Local Fiscal Recovery Funds	$10,635