Finding 366878 (2022-003)

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: Village staff is not preparing financial statements or schedules for federal and state awards, relying on auditors instead.
Impacted Requirements: Lack of internal controls may lead to undetected misstatements in financial reporting.
Recommended Follow-Up: Provide training for Village personnel to enhance their understanding of their responsibilities in financial statement preparation.

Finding Text

Finding #2022-003 – Preparation of Financial Statements and schedules of Federal and State Awards Condition: Village staff does not prepare the financial statements and accompanying notes and schedules of federal and state awards. The Village has designated individuals responsible for reviewing and accepting the financial statements and schedules of federal and state awards. Effect: Because Village staff relies on the auditor to assist with the preparation of the financial statements and the 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 the schedule of federal and state awards. Cause: The Village does not prepare the financial statements nor the schedules of federal and state awards and related notes. Criteria: Internal controls over preparation of the financial statements, including footnote disclosures, and the schedule of federal and state awards, should be in place to provide reasonable assurance that a misstatements would be prevented or detected. Recommendation: The auditor 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, but we review them and accept the statements prior to them being issued. We prepare financial reports that are reviewed by management on a monthly basis. Any concerns or questions are addressed throughout the year.

Corrective Action Plan

Finding #2022-003- 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. Contact Person: Lynn Yager, Clerk/Treasurer Anticipated Completion: Not Applicable

Other Findings in this Audit

366876 2022-001

Material Weakness
366877 2022-002

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