Finding Text
Criteria - The internal control structure should be designed to contain the following:
1. Segregation of duties to provide reasonable assurance that all transactions are being properly approved.
2. All accounts are reconciled in a timely manner, and account reconciliations are reviewed.
3. Timely preparation of internal financial statements and other financial information to ensure those in charge of governance can make financial decisions based upon current financial data.
2024-001 Internal Control Structure (Continued)
Condition - BCHS’s internal control structure presently is not operating effectively in certain phases including, the summary of checks received is not being compared to the bank deposit slip, reconciliations of accounts receivable balances to the general ledger total are not performed in all instances, the monthly accounts receivable balances are not reviewed and approved by a member of management, reconciliations are not presently reviewed by a member of management, credit card statements of the key employees are not reviewed by another member of management, and in several instances, transactions on credit card statements were not supported by receipts.
Cause - Due to the size of the accounting staff implementation of procedures related to reconciliations, approval and posting of transactions was not considered practicable.
Effect - The lack of adequate internal controls relating to approval of transactions and account reconciliations could result in the financial statements being misstated.
Context - Systematic.
Recommendation - We recommend BCHS implement adequate compensating internal controls relating to transaction approval and account reconciliation which provide for approval of all transactions and reconciliation of all accounts on a monthly basis.