Finding Text
Material Weakness - Internal Control - Accounting Corrections Criteria According to Government Auditing Standards and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) a deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected, on a timely basis. Condition The auditor calculated, and NWCH approved recording a material adjustment to the financial statements in order for the audited financial statements to be materially correct. Context Developer fees totaling $818,257 were not recorded as receivables, revenue, deferred revenue, and a liability payable to a consultant, and was corrected with an audit adjustment to agree to Golden Eagle Apartments Limited Partnership's 2023 audit. Cause The transaction discussed above did not go through NWCH's bank accounts and, accordingly, was not recorded by the bookkeeper. Effect The audited change in net assets for all adjustments decreased $121,311, assets decreased $42,166, liabilities increased $28,663 after audit adjustments. Accordingly, total adjustments were not material to the financial statements in 2023. Questioned Costs None. Recommendation A college degreed accountant, CPA, or CPA firm is needed to oversee the accounting function for NWCH to properly prepare the consolidated financial statements in accordance with U.S. GAAP.