Finding Text
Condition – A material journal entry was identified after the issuance of the financial statements.
Cause – Management clarified with the Board of Directors of the Foundation the intent of the support
provided during the year to KLRHC was contributions payable to LHCNY. As such, management
determined an adjustment was necessary to reduce the contributions receivable from the
Foundation for the amounts transferred to KLRHC.
Criteria – Management should ensure related party transactions are recognized in accordance with
generally accepted accounting principles.
Effect – The material entry was recognized.
Recommendation – We recommend management reissue the financial statements to properly reflect
the transaction. Further, we recommend that management gain an understanding of all related party
transactions through review of Board actions or other support to ensure that all transactions are
recognized appropriately.
Management’s Response – Management agrees with this comment and the adjustment was made
and financial statements were reissued.