Finding Text
Finding Type: Material weakness in internal controls over financial reporting.
Criteria: The Club is required to prepare financial statements in accordance with generally accepted
accounting principles (GAAP). This the responsibility of the Club’s management. The preparation of the
financial statements in accordance with GAAP requires internal controls over both maintaining internal
books and records and reporting the external financial statements and the related footnotes.
Conditions and context: The current staffing of the Club does not allow the Club to have an internal control
system in place designed to provide for the preparation of the financials and related footnotes being
audited. The Club requested that the external auditors draft the financial statements and accompanying
notes as a result.
Cause of condition: Due to the cost and other considerations, the Club has requested that their auditor’s draft
the financial statement and related footnotes.
Effect of Condition: As a result of this condition, the Club lacks internal controls over the preparation of the
financial statements in accordance with GAAP, and instead relied, in part, on its external auditors for
assistance with this task.
Recommendation: It is recommended that the Club ensures that members of management responsible for
the accounting and reporting function receive appropriate training to ensure they are able to apply
generally accepted accounting principals in review and taking responsibility over the financial statement
and footnotes prepared by the external auditors. We also recommend hiring additional experienced staff
to oversee the accounting and reporting function.
View of Responsible Officials and Planned Corrective Action: The Club has evaluated the cost vs. benefit of
establishing internal controls over the preparation of financials statements in accordance with GAAP and
determined that it is in the best interest of the Club to outsource this task to its external auditors, and to
carefully review the draft financial statements and notes prior to approving them and accepting
responsibility for their content and presentation.
Planned Implementation Date of Corrective Action: On-going. The Club will continue to evaluate the cost vs.
benefit of having someone in management capable of preparation and/or of the financial statements in
accordance with GAAP.
Person Responsible for Corrective Action: Chris Emond, Chief Executive Officer