Finding 480639 (2022-002)

Significant Deficiency in Internal Control Over Financial Reporting and Significant Deficiency in Internal Control Over Compliance: Auditing Finding 2022-002 - Transactions Recorded from Bank Statement Criteria: Transactions should be recorded in the accounting system based on the dates they occur. Condition: The Organization works with an outsourced provider to maintain its accounting system and record transactions. We noted a number of transactions were recorded from the bank statement with some inconsistencies in dates and classification. Some of these inconsistencies were present in documentation reviewed during testing of the major program. Cause: Internal controls are not designed to ensure recorded transactions are accurately entered into the accounting system and correctly classified. No formal review of the entries made occurs, besides high-level review by the Executive Director and Board of Directors in scheduled meetings. Effect: Misstatements could occur and not be detected. Recommendation: We suggest the Organization implement a more detailed review of recorded transactions and the reports generated at month-end to ensure accuracy, completeness, and proper classification of transactions. Views of responsible officials: Management agrees with the finding. Procedures will be discussed to provide information to third-party accountant to reconcile transactions based on source documentation instead of recording from the bank statement, and management will perform a more detailed review on recorded transaction.