Finding 477863 (2023-002)

Material Weakness: Finding 2023-001: CRITERIA: Management is responsible for establishing an internal control system that ensures strong financial accountability and safeguarding of assets. A critical aspect of financial management is the maintenance of accurate accounting records. CONDITION: (1) During our testing of cutoff surrounding accounts payable, we noted multiple instances of expenditures that should have been accrued in fiscal year 2023 but were not. In addition, we noted errors in recording retainage payable on construction contracts. These errors, totaling $1,095,264, were corrected by audit adjustment. (2) During our testing of capital assets, we noted the district is not effectively tracking and accounting for completed and ongoing construction projects. In addition, we noted the district is not properly maintaining the subsidiary ledger and reconciling the asset ledger to the general ledger and other underlying accounting records. There were material corrections made by the auditor. CAUSE OF CONDITION: The cause is a result of not properly implementing a designed system of accounting and internal controls. EFFECT OF CONDITION: The effect of this condition could result in the financial statements being materially misstated and misappropriation of assets. RECOMMENDATION: It is recommended that the district implement policies or procedures to establish an internal control system that will ensure strong financial accountability and accurate accounting records. VIEWS OF RESPONSIBLE OFFICIALS: Management will implement policies or procedures to establish an internal control system that will ensure strong financial accountability and accurate accounting records.