Finding Text
Internal Control Over Financial Reporting - Account Reconciliations
Criteria or Specific Requirement: An accounting system and respective internal controls should
provide timely and accurate information for management. The reconciliation of account balances
is an integral internal control activity to determine that stated account balances are accurate and
fairly reported. Management and accounting personnel should reconcile general ledger accounts
to subsidiary ledgers and other supporting documents in a timely and effective manner.
Condition: Beyond cash, Neighborhoods, Inc. of Battle Creek (NIBC) did not reconcile most all
asset and liability accounts on the general ledger for the year ended June 30, 2022. Reconciliation
of the accounts required auditor assistance and required extensive research and data gathering by
NIBC to accurately reflect account balances.
Effect: Without performing adequate account reconciliations, information provided to
management is inaccurate. Also, the probability that fraud or material errors will occur and go
undetected generally increases. Additionally, the June 30, 2022 audit was not submitted within
nine months after the fiscal year end as required by Uniform Guidance.
Cause: Turnover in fiscal and management positions resulted in individuals not being aware of the
nature of account balances and how to reconcile them. Additionally there were changes in
systems and bank accounts which created further difficulties in locating historical information.
Auditor's Recommendation: We recommend NIBC implement procedures to ensure accounts are
reconciled timely and accurately.