Finding 485405 (2024-001)

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Requirement
P
Questioned Costs
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Year
2024
Accepted
2024-08-29
Audit: 318153
Organization: Lincoln Christian University (IL)

AI Summary

  • Core Issue: There is a material weakness in internal controls over financial reporting, leading to significant audit adjustments.
  • Impacted Requirements: Management must ensure the accuracy and completeness of financial records and establish effective internal controls to comply with GAAP.
  • Recommended Follow-Up: Enhance internal controls and expand year-end closing procedures to ensure all transactions are accounted for and proper accounting standards are applied.

Finding Text

2024 – 001 Material Audit Adjustments and Financial Statement Preparation Type of Finding: Material Weakness in Internal Control over Financial Reporting Condition: During the course of the audit, we proposed significant audit adjustments. In addition, University does not have an internal control policy in place over annual financial reporting that would enable management to prepare its annual financial statements and related footnote disclosures to ensure they are complete and presented in accordance with GAAP. Criteria or specific requirement: Management is responsible for the accuracy and completeness of all financial records and related information, including adjusting the financial statements to correct material misstatements and produce accurate financial statements on a timely basis. Management is also responsible for establishing and maintaining internal controls for the fair presentation in the financial statements, including disclosures in accordance with GAAP. Effect: Material adjustments were proposed and subsequently recorded by management. The lack of sufficient controls over year-end reporting increases the likelihood that a material misstatement would not be prevented or detected. Cause: The University has a limited number of personnel with limited financial reporting experience. The University relied on the audit firm to prepare the annual financial statements and related footnote disclosures, in particular those that relate to the presentation of the discontinued operations accounting. However, they have reviewed and approved the annual financial statements and the related footnote disclosures. Recommendation: We recommend management enhance the internal controls over financial reporting. Year-end closing procedures should be expanded to ensure all transactions have been accounted for, appropriate accounting standards have been applied. Views of responsible officials: There is no disagreement with the audit finding.

Corrective Action Plan

2024-001 Material Adjustments and Financial Statement Preparation Recommendation: We recommend that the University establish internal procedures to adjust all account balances at year-end and evaluate their internal staff capacity. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: This was the final year in which Lincoln Christian University provided degree-earning education. These material entries and assistance with financial statement preparation are not expected in future years. Name of the contact person responsible for corrective action: Margie Martin, Director of Accounting Planned completion date for corrective action plan: May 31, 2025

Categories

Material Weakness Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $538,789
84.038 Federal Perkins Loan Program $430,239
84.063 Federal Pell Grants $68,167
84.007 Federal Supplemental Educational Opportunity Grant Program $15,164