Finding Text
Finding: 2023-002 Preparation of the U.S. GAAP Basis Financial Statements
Criteria: The responsibility of the Township’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles rests with the management of the Township. Management is also responsible for the system of internal accounting controls used to ensure that the financial statements are not materially misstated.
Condition: Along with assisting with the year-end closing procedures to the Township’s accounting records, the financial statement auditors also assisted the Township by preparing the annual financial statements (including related notes).
Cause: Management does not have the expertise necessary to prepare the financial statements in accordance with U.S. generally accepted accounting principles.
Effect: This situation could allow the misstatement of the financial statements.
Perspective: Although this finding is considered to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. The Township has engaged the financial statement auditors to prepare financial statements in accordance with U.S. generally accepted accounting principles which is a nonattest service. This is a systemic problem that is likely to continue due to the small size of the Township and an overall lack of resources.Recommendation: We recommend that the Township acquire the expertise necessary to prepare the annual financial statements including the required disclosures in accordance with U.S. generally accepted accounting principles.
Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. However, due to the cost of implementing this recommendation, the Township Board believes the cost of obtaining the necessary expertise would out-weigh the benefit. Therefore, the Township will continue to request assistance from its financial statement auditors with the preparation of its annual financial statements.