Finding Text
Criteria or specific requirement (including statutory, regulatory, or other citation): Timely posting and reconciliation of all account balances in the general ledger is essential to maintaining an effective system of internal control over financial reporting. Condition: The entity’s maintenance of the general ledger was significantly delayed beginning in March 2020 and continued through into the current fiscal year. Cause: One of the entity’s key accounting personnel passed away unexpectedly in March 2020. The entity had not adequately cross trained other members of the accounting team to prepare for such an unexpected and unlikely event. The second cause was the COVID-19 pandemic which hindered the entity’s ability to address the sudden unexpected absence of one of the key accounting team members and deal with the challenges presented by working remotely, dealing with limited staffing and other COVID-19 related hurdles. Effect: The postponement of general ledger maintenance, including posting transactions and performing reconciliations, left the entity vulnerable to potential failure to prevent or detect material misstatement in the preparation and disclosure of the financial statements in accordance with GAAP. Recommendations: To the extent possible, we recommend the entity engage in cross training and documenting of procedures over all financial reporting processes to mitigate the effect of any future interruptions in normal business operations.