Finding Text
Condition and Criteria: During the current year audit, we discovered deficiencies in internal controls over
capitalization. Several items over the $5,000 capitalization threshold that were related to new assets or
betterments rather than routine repair or maintenance were not capitalized.
Cause: The Organization received guidance to expense flood related repairs. However, it appears
purchases unrelated to flood damage were not tracked separately resulting in many fixed asset additions
being missed.
Effect: The effect of these deficiencies in internal controls was a $110,224 understatement in assets, a
$110,224 overstatement of expenses, and a $110,224 understatement of net assets.
Recommendation: We recommend the Organization review repair and maintenance accounts at year-end
for items above the $5,000 capitalization threshold that are not routine maintenance and make appropriate
adjustments as part of the year-end close process.