Finding 517839 (2022-001)

Criteria For the organization's financial statements to be prepared in accordance with Generally Accepted Accounting Principles, the standards require that all transactions are accurately recorded, classified, and presented to reflect the true financial position of the organization. Additionally, internal controls should be in place to ensure the accuracy, completeness, and reliability of financial reporting. Condition Several material misstatements were identified during the audit, indicating that the organization's financial statements were not initially prepared in accordance with Generally Accepted Accounting Principles (GAAP). These misstatements required significant adjustments to correct errors in revenue recognition, expense classification, and asset valuation, raising concerns about the effectiveness of the organization's financial reporting processes and internal controls. Cause The significant turnover of key management personnel led to a lack of continuity and oversight in the organization's financial reporting processes. This likely caused a breakdown in internal controls, insufficient knowledge transfer, and a lack of consistent application of GAAP during the financial reporting period. Additionally, new or interim management may not have had adequate experience or familiarity with the organization's financial processes, contributing to the misstatements. Effect The misstatements and improper recording of transactions led to the misstatement of several accounts resulting in producing inaccurate financial statements. Consequently, several audit adjustments more than $500,000 were made to ensure the proper alignment of these accounts with the underlying financial records.