Finding Text
2022-01 (Material weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Prior year balances in Quickbooks Online accounting software were incorrect based on the prior year audit report financial statements. The client made prior period adjustments dating back several years, causing net assets to roll forward incorrectly. Context: Deficiency was discovered while performing substantive testing on prior year balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization should have a process for reviewing prior year balances in their Quickbooks Online accounting software to ensure that they match to the audited financial statements. The organization should refrain from making changes to their financials once financial statements for the period under audit have been issued and closed. This is a repeat finding. Response: We acknowledge that there is currently not a sufficient process in place to review Quickbooks Online balances. A policy will be implemented to review prior year Quickbooks Online balances to ensure that they match to the audited financial statements now that the Organization has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.