Finding Text
Condition: During the audit, it became apparent that there were insufficient procedures in place to ensure GAAP-compliant accounting and financial reporting, primarily around cutoff accruals and unearned revenue.
Criteria: The Organization should have proper controls, personnel, and oversight in place to produce an effective control environment related to GAAP-basis accounting and financial reporting.
Cause: The Organization does not have proper controls related to recording, review, and oversight of the financial accounting and reporting functions.
Effect: Several adjusting entries were identified during the audit in order to present GAAP-basis financial statements.
Recommendation: The Organization should re-evaluate its current procedures for its accounting and reporting functions pertaining to accruals and restricted net asset classifications and appropriately address any deficiencies.
Views of Responsible Officials and Planned Corrective Actions: The Organization agrees will take the following actions to implement additional review and oversight procedures in its financial policies:
• Reconcile accounts and identify receipts and expenses where accruals are needed.
• Create documentation for month-end and year-end closing requirements.
• Review receipts monthly to ensure all restricted funds are identified and classified properly in the Organization’s accounting system.
• Update the Organization’s financial policies to reflect the established changes.
• Process any necessary entries to adjust accounts accordingly.
• Conduct internal training to bring awareness to staff of the necessity of accruals and project charging and tracking.