Finding Text
Criteria: Internal controls including proper segregation of duties should be in place to provide reasonable assurance that all financial transactions are properly reported, and assets are safeguarded. This is essential to ensure accurate internal and external financial statements can be prepared. Management must have accurate financial information in order to monitor, control and execute decisions in the best interest of the School. All year-end adjustments should be completed prior to commencing the audit. Condition: The business staff had prepared many schedules and journals in anticipation of the year end closing and audit, but they did not actually adjust some of balance sheet accounts, before the audit commenced. From the information provided by the School we did post 15 late client entries. During our testing we also identified additional accounts needing adjustment. This process did identify several errors coming forward from prior years that had not been identified previously. Context: Many issues reported previously were corrected in the current year but there are still several closeout processes that need to be finished. A new Business Manager was hired in March of 2020. She and her new business office staff spent considerable time over the last several years correcting, researching and recording for the past years in order to complete the audits and get the School back in compliance. Cause: Dealing with many of the prior issues takes time and attention away from current duties. Effect: The effectiveness of the internal control system relies on prudent policies and enforcement by management and the Board of Education. Close out and reconciliation of all balance sheet accounts at year end is the final step of reviewing transactions and accounts to assure all errors are corrected in your accounting records. Identification of Prior Audit Findings: This finding is a repeat of prior year findings 2022-002. Recommendation: It is the School’s responsibility to determine the financial statements, schedule of expenditures of federal awards and related footnotes are free of material misstatement. The most effective controls lie in management and the Board of Education’s knowledge of the School’s financial operations. Supervision and review functions must be done continually during all phases of the accounting cycle. With a small staff in the business office, cross training becomes exceptionally important. The Business Manager should continue training with her staff and working to record all year end adjustments. These processes will improve disclosure information and the timeliness of the audits. Views of Responsible Officials: The views of management are included in the corrective action plan beginning on page 40.