Finding Text
2023-2 Real Estate Tax Liability Over Accrued
Condition: Management did not properly record the real estate tax liability in the accounting records.
Criteria: The accrual accounting method ensures transactions are recognized in the accounting period
incurred, rather than paid, which follows the matching principle.
Cause: Management utilized recurring journal entries to post real estate tax expense instead of the actual
invoice.
Effect: The accrued liability account was overstated, as well as real estate tax expense, resulting in a prior
period adjustment.
Recommendation: I recommend management properly post all accruals and make necessary adjusting
entries to properly reflect the financial position of the Project.