Finding 478705 (2023-001)

Significant Deficiency
Requirement
A
Questioned Costs
-
Year
2023
Accepted
2024-07-17
Audit: 315374
Organization: Nek Broadband (VT)

AI Summary

  • Core Issue: The District lacks authorization limits for personnel over journal entries, leading to unapproved changes in material entries.
  • Impacted Requirements: This deficiency undermines the control environment, increasing the risk of errors and misrepresentations in financial statements.
  • Recommended Follow-Up: Review and implement policies for journal entry approval to ensure appropriate personnel are assigned this responsibility; management has agreed and initiated a policy update for 2024.

Finding Text

Criteria: A strong control environment, establishes and maintains authorization limits by personnel levels over the approval and recording of journal entries. This control should include review and approval of changes to original journal entries when material. Conditions Found: During our audit, we noted the District did not have authorization limits by personnel over journal entries. Approval was noted for all journal entries tested, however, there was an instance where a material journal entry was changed and not approved. Cause: The District lacks authorization limits on journal entry review and approval. Effect: The lack of approval and establishment of authorization limits around general journal entries could result in errors and misrepresentations in the financial statements. The condition found appears to be systemic in nature and is considered to be a significant deficiency in internal controls around journal entry approval. Recommendation: We recommend that polices regarding journal entry review and approval be reviewed to determine that individuals at the appropriate level are assigned this important responsibility. Views of Responsible Officials: Management agrees with this recommendation and has implemented a policy in 2024.

Corrective Action Plan

The management of NEK Broadband acknowledges the finding of a significant deficiency in internal controls noted by our auditors. We have implemented a new control to present all general journal entries as part of the monthly financial statement package to be reviewed by the finance and audit committee. Documentation of that review will be included in the monthly meeting minutes of the finance and audit committee. Further, we plan to implement a new accounting system with workflow controls, approval requirements and an integrated inventory system within the next year.

Categories

Internal Control / Segregation of Duties Significant Deficiency

Other Findings in this Audit

  • 478706 2023-001
    Significant Deficiency
  • 1055147 2023-001
    Significant Deficiency
  • 1055148 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.85M