Finding Text
Internal Control over Financial Reporting
Criteria – Organizations are required to maintain their accounting records in accordance with generally accepted accounting principles (GAAP). Any errors or corrections are required to be captured and corrected in a timely manner.
Condition – The financial statements were not ready for the audit. Adjusting journal entries were required throughout the audit process. Significant audit adjusting entries were proposed and made during the audit.
Cause – There was a breakdown in the internal controls over the review of internal financial statements due to issues related to the implementation of a new accounting software.
Effect – The organization had inaccurate financial statements for over a year after its year-end.
Repeat Finding – No.
Recommendation – Management and the board should review its current staffing levels and obtain the training required to produce accurate and timely reports from its accounting software. A process for regular review of its financial statements should be established to ensure activity is timely recorded and in accordance with GAAP.
Auditee's comments and response – Management and its contracted accounting staff will monitor financial reports and activities of Minnesota Humanities Center to ensure proper recording.
Responsible party for the corrective action – Aby John, Chief Financial Officer