Finding Text
Condition Found: During our testing, we noted that a true bank reconciliation was not prepared for certain bank accounts. Reconciliations were prepared using the bank balance and the check register balance. The School rolled forward each month’s ending check register balance to the beginning balance on the following month’s bank reconciliation and netted monthly bank activity and outstanding transactions from the check register to arrive at the ending balance. Criteria: The School should reconcile cash accounts accurately and on a timely basis using the bank balance and the balance per the general ledger instead of the check register balance. Reconciliations should be reviewed by a member of management who is knowledgeable in such matters. Cause: The accounting software the School uses did not have a bank reconciliation module. Therefore, management resorted using an alternative solution. Management used the check register balance, which is a transaction detail report, to reconcile to the bank statement without observing and reviewing the ending cash balance in the general ledger. Possible Asserted Effect: This resulted in cash being understated by $98,800 at year-end. In addition, there could potentially be future material adjustments to cash due to the improper method used to reconcile cash. Repeat Finding: There was not a similar finding in the prior year. Recommendation: We recommend that all bank accounts be reconciled monthly and in a timely manner. The School should purse adding the bank reconciliation module to their accounting software. In addition, reconciliations should be prepared using the bank balance and the balance per the general ledger instead of the check register balance. Lastly, we suggest that a member of management review the bank reconciliations for any unusual items, investigate and fully resolve any such items, and document his or her approval. Management Response: The School made the required adjustments to its accounting records. The School is reviewing its accounting policies and procedures and the recommendations above. The School will update its procedures during FY 2024.