Finding Text
Condition During our audit, we noted that the internal control system does not include a process for
preparing the annual audited financial statements and the related disclosures in accordance with GAAP. Criteria: Management is responsible for establishing and maintaining internal controls and for the fair presentation of the financial position, change in net position, and disclosures in the financial statements, in conformity with U.S. Generally Accepted Accounting Principles (GAAP). Cause: The additional costs associated with hiring staff experienced in preparing year-end financial reports, including additional training time, outweigh the derived benefits. Effect: Although the auditors are preparing the financial statements and related footnotes,
management of the Organization thoroughly reviews them and accepts responsibility for their completeness and accuracy. Recommendation: We recommend that management continues to make this decision on a cost/benefit basis. Management's Response: Management is in agreement with the finding and recommendations. Management performs the following mitigating controls: Reviews and approves all adjusting entries proposed by the auditor, Compares final adjusted trial balance with audited financial statements, Compares HUD data schedules and supporting data with final adjusted trial balance.