Finding 565944 (2024-001)

Finding --- Inadequate controls over the financial reporting process, such as performing reconciliations, posting yearly adjustments and posting of closing adjustments for annual financial reporting. Criteria --- Management should have in place a system by which to capture all adjusting journal entries necessary to analyze year end account balances and close the books. A review should be performed by someone other than the preparer to ensure all adjustments are posted. Condition --- Although the Organization prepared certain schedules for annual financial reporting, adjusting journal entries were not made that agreed the financial statements to the support schedules. Context --- During the financial audit, a review of the prior year comparison indicated that yearly adjustments had not been posted and historical amounts existed in certain accounts that did not contain a balance in the current year, but for which management had prepared a schedule. Effect --- Without a process and formal reviews for the annual financial close, certain adjustments could be missed and material misstatements could occur. Cause --- There were several changes in the financial department from the prior year. Recommendation --- The Organization should continue to seek out qualified personnel, board members or an external certified public accountant to perform reviews of accounting functions. The Organization should also develop written procedures for the annual financial closing process. A review should be performed by someone other than the preparer to ensure all adjustments are posted for a complete and accurate set of books. Management response --- Management will develop and implement written procedures for the annual financial closing process. A review will be performed by someone other than the preparer to ensure completeness and accuracy of the annual financial information.