Finding Text
Financial Reporting Criteria – A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements of the financial statements on a timely basis. Properly designed policies and procedures and implementation of the policies and procedures are an integral part of ensuring the reliability and accuracy of the District’s financial statements. Condition – Material amounts of payables and capital asset additions were not properly recorded in the District’s financial statements. Adjustments were subsequently made by the District to properly record these amounts in the financial statements. Cause – District policies do not require, and procedures have not been established to require independent review of year end cut-off and capital asset transactions to ensure the District’s financial statements are accurate and reliable. Effect – Lack of policies and procedures resulted in District employees not detecting the errors in the normal course of performing their assigned functions. As a result, material adjustments to the District’s financial statements were necessary. Recommendation – The District should implement procedures to ensure all payables and capital asset additions are identified and properly recorded in the District’s financial statements. Response – Procedures will be put in place to verify all payables and capital assets are properly included in the financial statements. Conclusion – Response accepted.