Finding 2024-002: Internal Control Over Financial Reporting– Significant Deficiency
Audit Finding: Management is responsible for the design and implementation of internal controls over year-end financial reporting, including controls over procedures used to enter transaction in the general ledger and record recurring and nonrecurring adjustments to the financial statements on an accrual basis. During the course of the audit, journal entries were required to reconcile accounts receivable, accrued expenses, and accrued PTO from a cash basis to an accrual basis, which indicate a lack of operating effectiveness of internal controls over the financial reporting process.
Audit Recommendation: We recommend School District 12 Education Foundation (dba Five Star Education Foundation) review policies and procedures related to the year-end financial reporting process and controls should be implemented to ensure accrual basis financial reporting can be achieved.
Management’s Response
and Corrective Action Plan: School District 12 Education Foundation (dba Five Star Education Foundation) agrees with the finding and recommendation. These transactions were proactively shared with the auditor at the commencement of the audit and discussed. Actions were already taken to fix these processes. In 2023 an outside professional was hired to mitigate these circumstances and ensure adherence to GAAP accounting. Management is hiring new accountants to alleviate future issues in this space. Management is in the process of implementing enhanced processes and procedures to achieve the proper recording of transactions on an accrual basis. A year-end checklist will be used to ensure that all accruals are booked in accounts receivable and payables.
Contact and Completion Date: Shannon Hancock, 720-972-4342, shannon.hancock@5starfoundation.org, is the primary contact, and the Executive Director at School District 12 Education Foundation (dba Five Star Education Foundation). The corrective action is expected to be resolved before the end of the next fiscal year-end of December 31, 2025.