Finding Text
Preparation of Financial Statements (material weakness) Repeat Finding: Yes – 2018-001
Condition:
During the course of the financial statement audit, various adjusting entries were not identified by management on a timely basis and were required to be posted to present the financial statements in accordance with accounting principles generally accepted in the United States of America. The adjusting entries affected the following accounts:
• Interfund balances (due to/from and transfers between various funds)
• Health insurance payable/expense (General fund)
• Accounts receivable (General fund and Airport fund)
Criteria:
The City’s internal controls over financial reporting should result in the accurate preparation of financial statements in accordance with accounting principles generally accepted in the United States of America.
Cause:
The financial statement preparation process does not provide for accurate presentation of the financial information in accordance with principles generally accepted in the United States of America.
Effect:
Several adjusting journal entries were required to correct the financial information as provided.
Questioned Costs:
Unknown.
Recommendation:
Management should implement policies and procedures surrounding the preparation of financial statements and various supporting schedules, reconciliations, and other related data.
Auditee Response and Corrective Action Plan:
Management agrees with the finding. City will seek to expand capacity in financial departments and to streamline accounting records.
Auditor’s Conclusion:
This finding remains as stated.