Finding Text
Criteria – Organizations are required to maintain their accounting records in accordance with generally accepted accounting principles (GAAP).
Condition – During the audit, significant adjusting entries were proposed and made:
• to record the interest expense for the SBA loan in the amount of $29,000.
• to record $44,000 receivable for revenue
• to record $330,000 of in-kind contributions received
Cause – There was a breakdown in the internal controls over the review of internal financial statements.
Effect – A material misstatement of the consolidated financial statements occurred and was not detected.
Repeat Finding – No.
Recommendation – Management and the board should establish a process for regular review of its consolidated financial statements with its contracted accountant to ensure activity is recorded in accordance with GAAP.
Auditee's comments and response – Management and its contracted accounting staff will monitor financial reports and activities of Listening House to ensure proper recording.
Responsible party for the corrective action – Molly Jalma, Co-Executive Director