Finding Text
Conditions and Criteria: During the audit we noticed that the bank reconciliations for the general fund checking account were not being reconciled against the District’s general ledger software on a regular basis. In addition, we noticed that the business manager prepares the bank reconciliations during the year, however, there is no evidence of review. During the year ended June 30, 2023, we noticed general ledgeraccounts, specifically interfund receivable and payable were not being reconciled on a regular basis. Differences that existed throughout the fiscal year were specifically related to payroll expenditures and
withholdings related to the Food Service Fund and General Fund. Effect: The effect of not preparing bank reconciliations that are reconciled against the District’s general ledger is that reporting errors in the recording of cash receipts, cash disbursements and wire transfers can occur and not be detected or resolved in a timely manner. In addition, because the business manager has access to the general ledger throughout the year, evidence of a review is important to demonstrate proper segregation of duties. The effect of not reconciling interfund receivable and payable accounts for all governmental funds on a consistent basis allowed the accounts to not equal in the aggregate. Interfund receivable and payable accounts were reconciled at the time of the audit.
Auditors’ Recommendation: We recommend that as part of preparing monthly bank reconciliations, the reconciliation with the balance from the general ledger should be performed. Any differences should be immediately investigated and corrected. Once completed, the reconciliation should be reviewed by someone independent of the preparer. Both, the individual preparing and reviewing the bank reconciliations should sign or initial and date the reconciliation when completed. We recommend that the District incorporate procedures to ensure that such general ledger accounts are reconciled on a monthly basis. It is important that a dual accounting system is utilized in each individual fund and transactions between funds should be booked through the interfund receivables and payables.
School District’s Response: The District will ensure that bank reconciliations are prepared on a timely basis throughout the year, which includes a reconciliation to the general ledger. The District will have the Superintendent review bank reconciliations. Once completed, the preparer and reviewer will sign and date each reconciliation to evidence their completion. Lastly, the District will reconcile due to/due from accounts on a monthly basis.