Finding Text
Type of Finding:
Significant Deficiency in Internal Control over Financial Reporting
Condition: Management is responsible for reviewing and retaining all support of journal entries made to the general ledger detail to ensure no fictitious or incorrect entries are made.
Criteria or Specific Requirement: Internal controls should be in place to ensure the support for all journal entries are retained to support the amount and purpose of the entries made to the general ledger detail.
Context: While performing audit procedures, it was noted that management was unable to provide supporting documentation for one of the journal entries selected during the testing and review of the general ledger.
Effect: The lack of supporting documentation for the journal entry selected for testing increases the risk of misstatements, fraud, or errors occurring and not being detected and corrected during the journal entry preparation process.
Cause: Management was unable to provide the supporting documentation for the prepaid journal entry selected during the testing process to support the accuracy and purpose of the entry made.
Repeat Finding: N/A
Recommendation: The Corporation should evaluate their policies and procedures relating to the retainment of supporting documentation during the journal entry preparation and close process to ensure all supporting documentation for any journal entries made are accessible to support both the accuracy and purpose of the entries made.
Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. Management will review the policies and procedures currently in place relating to the retainment of journal entry support to ensure that all supporting documentation for entries made to the general ledger are kept validating the accuracy and purpose of journal entries.