Finding Text
2023-005 Inadequate Controls Over Related Party Transactions
Criteria: Management is responsible for implementing adequate controls to ensure proper documentation and approval of related party transactions.
Condition: Insufficient controls over related party transactions.
Cause: Lack of controls. No policies or procedures that describe the proper supporting documentation for related party transactions. No policies or procedures that describe the proper review and approval of related party transactions.
Effect: Could result in undetected errors and irregularities and misstated interim financial reports. Could also result in the Organization’s funds being used for nonbusiness related expenses or possible fraud.
Questioned Costs: None noted.
Recommendation: Improve internal controls over related party transactions. Implement written procedures for related party transactions, including required documentation and approval.
Views of Responsible Officials and Planned Corrective Actions:
Management has included Butler CPA to help with accurately reporting and documenting internal and third-party transactions.