Finding 560044 (2023-001)

Identification as a repeat finding This is a repeat finding. Criteria Management is responsible for establishing controls over financial reporting. Statement of condition Management is responsible for the design, implementation, and maintenance of a system of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. During our audit, we noted management does not evaluate and allocate expenses based on employee estimates of time spent by function and proportion of the association’s floor space utilized by each employee during the year. Cause Management does not have an adequate process in place to allocate expenses that are attributable to more than one program or supporting function. Effect Appropriate estimates of employee’s time spent by function are not being evaluated on a regular basis. Potential effect is that expenses are not allocated correctly based on employee estimates of time spent by function and proportion of the association’s floor space utilized by each employee. Questioned costs $0 Views of responsible officials Starting July 2023, the association has implemented a process to evaluate and allocate expenses based on employee estimates of time spent by function and proportion of the association’s floor space utilized by each employee during the year. Context Discovered during inquiries with management and review of the general ledger. The issue with the association’s system of internal control over financial reporting as it relates to allocation of expenses represents a significant deficiency in internal control. The internal control deficiency was not discovered as a result of the use of sampling procedures. Recommendation Management should implement a process to evaluate and allocate expenses based on employee estimates of time spent by function and proportion of the association’s floor space utilized by each employee during the year.