Finding Text
All Programs
2023-001: Significant Deficiency in Internal Controls Over Financial Reporting
Repeat Finding:
No
Condition:
Certain asset and liability accounts were not reconciled as of September 30, 2023 prior to the start of the audit. There were 3 cash accounts and 1 accounts payable account that were not reconciled on a timely basis or not reconciled at all. An audit adjustment was made to correct the cash accounts in the general ledger.
Criteria:
Strong internal controls require that all accounts on the statement of financial position be reviewed and reconciled monthly and at year end.
Cause:
Management in the finance department did not properly review cash account reconciliations and investigate unreconciled differences. Additionally, the year end accounts payable aging report was not properly reviewed by management of the finance department, which caused certain invoices to be improperly included in the aging reports.
Effect:
Financial statements generated throughout the year may not have been accurate and complete.
Questioned Costs:
Unknown
Recommendation:
We recommend that all general ledger accounts be reconciled on a monthly basis. A monthly financial close checklist should be utilized to identify and track all general ledger account reconciliations. This will reduce the occurrence of unreconciled general accounts and activity that may result in a material misstatement of the financial statements. We further recommend that management of the finance department review all reconciliations and investigate unreconciled differences. Lastly, we recommend that all system generated reports are reviewed for accuracy.
Management’s Response and Corrective Action Plan
See Schedule of Corrective Action Plan.
Section III – Federal Award Findings
None noted.