Finding 584657 (2021-001)

Finding 2021-001: Year-End Close and Review Condition and Criteria: During the prior year audit, we discovered deficiencies in the internal controls over the year-end close and review process that accumulated to a material weakness. Year-end balances for accrued wages, compensated absences, accrued property taxes, and unallocated deposits required adjustments due to a number of reasons including year-end entries were entered incorrectly, balances were incorrectly calculated, or simply no year-end entry was made. In addition, cash balances contained numerous outstanding reconciling items that were required to be removed as they related to duplicative checks and deposits. Lastly, there were capital expenditures not appropriately capitalized per the Organization's policy. Recommendation: We recommend the Organization perform a thorough year-end close and review by reviewing current balances compared to the prior year, reviewing bank reconciliations for any largely outstanding items, and reviewing details of account balances, as necessary, prior to providing the trial balance for audit. errors related to the year-end close. First, beginning net assets were overstated by $61,479 related to un-posted adjustments from the prior year audit. Second, accounts payable and fixed assets were understated by $101,650 related to a construction bill that was not accrued at year-end. Third, accrued compensated absences was overstated by $62,919 related to errors in the Organization's calculation. We continue to recommend the Organization perform a thorough year-end close and review by reviewing current balances compared to the prior year, reviewing bank reconciliations for any largely outstanding items, and reviewing details of account balances, as necessary, prior to providing the trial balance for audit.