Finding Text
Program
ALN 16.575 - Crime Victim Assistance
Criteria
Establishment and maintenance of internal controls over the financial reporting process.
Condition
Transactions charged to Organization credit cards were not consistently and accurately recorded throughout the year. This resulted in audit adjustments of approximately $20,000. Included in this, accruing credit card interest and fees that had been incurred had not been reflected in the Organization's financial records. Credit card transactions were being recorded in the accounting system as credit card balances were being paid rather than as expenses were being accrued on the credit card balances.
Questioned costs
None
Context
The finding is the result of audit procedures performed and observation and inquiry with Organization management.
Effect
Inaccurate recording of credit card transactions can result in material misstatements of the financial statements, especially related to under-accrual of liability balances.
Cause
The root cause is an inadequate internal control environment and inadequate monitoring of financial processes.
Recommendation
We recommend that the Organization revisit it's procedures related to recording credit card transactions to ensure that all transactions are being accurately recorded in the Organization's accounting system.
Views of the Responsible Officials and Planned Corrective Action
The Organization's Board was made aware of the credit card balances including interest in September 2024. Previously, there was a lack of treasurer oversight, and no adjustments or entries were made to reflect year-end balances. Since becoming aware of the discrepancies between the credit card statements and transactions recorded in Quickbooks, the Organization has been entering all charges, interest and fees into the accounting software to reflect true balances on the credit cards. Going forward, all entries related to credit cards will be recorded by an outside financial management firm. The Organization has accepted a purchase agreement for the Organization's building at 118 S Mitchell Street. The outstanding balance of the credit cards owed will be paid from the proceeds of the sale. Since becoming aware of the credit card balances, the use of Organization credit cards has been significantly restricted by management. Going forward, all credit card charges, if there are any, are only approved by the discretion of the executive director and paid on the balance immediately.