Finding Text
2024-002 – Internal Control Over Financial Reporting– Significant Deficiency
Criteria: 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.
Condition: 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.
Cause: School District 12 Education Foundation (dba Five Star Education Foundation)
had not implemented policies or procedures, to the degree necessary, to ensure
that all transactions are properly accounted for in accordance with US GAAP.
Effect: Lack of operating effectiveness of internal controls over financial reporting
resulted in significant adjustments in financial reporting.
Questioned Costs: None noted.
Repeat Finding: Not a repeat finding.
Recommendation: We recommend School District 12 Education Foundation (dba Five Star
Education Foundation) review their policies and procedures related to the yearend
financial reporting process and the related controls are properly implemented
to ensure accrual basis financial reporting can be achieved.
View of Responsible
Officials: School District 12 Education Foundation (dba Five Star Education Foundation)
agrees with the finding and recommendation and has put together a corrective
action plan that is included in this report.