Finding Text
Finding 2023-004: Year-End Close and Review
Condition and Criteria: During the current year audit, we discovered deficiencies in internal controls over
the year-end close and review process. The Organization had difficulties providing an appropriate trial
balance for the current year. Upon receiving the trial balance, we noted errors related to negative expense
allocations, debit balances in payroll liabilities, and net assets not rolling forward from prior audit.
Cause: The Organization had an inexperienced fiscal officer during parts of 2022 and 2023. The 2022
audit adjustments were not posted correctly or adequately reviewed resulting in errors carrying forward to
2023. There was inadequate review of 2023 balances during the year-end close process.
Effect: The effect of these deficiencies in internal controls was a $46,810 overstatement of assets, a
$27,083 overstatement of liabilities, a $4,252 understatement of revenue, a $29,247 overstatement of
expenses, and a $19,727 overstatement of net assets.
Recommendation: We recommend the Organization obtain a better understanding of the accounting system
to allow for a thorough year-end close and review process. The year-end review should include reviewing
current balances compared to the prior year, reviewing grant drawdowns near year-end to ensure they are
recognized in the fiscal year the related costs were incurred, agreeing federal revenues earned to federal
expenditures for cost-reimbursable grants, and reviewing details of account balances, as necessary, prior to
providing the trial balance for audit.