Finding 59516 (2022-001)

Significant Deficiency Repeat Finding
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-03-27

AI Summary

  • Core Issue: Seventeen adjustments were made during the audit due to insufficient time for closing the District's books.
  • Impacted Requirements: Internal controls over financial reporting were inadequate, increasing the risk of errors and fraud.
  • Recommended Follow-Up: Management should ensure thorough reviews of balance sheet and income statement accounts during the closing process, especially those affected by audit adjustments.

Finding Text

Condition: Seventeen closing entries and audit adjustments were posted during the audit to report the District?s financial statements in accordance with Generally Accepted Accounting Principles (GAAP). Criteria: Internal controls over financial reporting should exist to ensure the financial statements are prepared in accordance with GAAP and limit the opportunity for errors and fraud occurring. Cause: The District?s staff did not have enough time to fully close the District?s books before the start of the audit, due to delays caused by the system conversion and staff turnover. Effect: The adjustments and closing entries posted during the audit increased the likelihood of an error being made in the District?s financial statements. Recommendation: We recommend that management ensure all balance sheet accounts are reviewed for proper cut-off and income statement accounts are reviewed for proper classification during the closing process, focusing on accounts affected by audit adjustments provided to the Finance Department. Views of Responsible Officials and Planned Corrective Actions: Management?s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.

Corrective Action Plan

The Calaveras County Water District respectfully submits the following corrective action plan for the Year Ended June 30, 2022. The findings from the June 30, 2022, schedule of findings and questioned costs for the Major Federal Program Award are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINDINGS ? MAJOR FEDERAL AWARD PROGRAM Finding 2022-001: Significant Deficiency ? Seventeen closing entries and audit adjustments were posted to report the District?s financial statements in accordance with Generally Accepted Accounting Principles (GAAP). Management agrees that the closing process during the audit period required numerous closing entries and audit adjustments. Although seventeen entries were posted, this is a significantly decrease from the forty entries in FY 2020-21. District staff has been in transition and was not able complete the review and ensure all entries were correct prior to the start of the audit. The District will continue to evaluate the fiscal year-end closing calendar and procedures to allow sufficient time to reconcile and post all required transactions prior to the start of the audit. Status of Prior Year Findings Finding 2021-001: Significant Deficiency ? Forty closing entries and audit adjustments were posted during the audit to report the District?s financial statements in accordance with Generally Accepted Accounting Principles (GAAP). Current Status: Seventeen adjustments were posted as part of the audit. See finding 2022-001 which is a continuation of this finding. Finding 2021-002: Significant Deficiency ? Reporting CFDA 97.039, US Department of Homeland Security, Federal Emergency Management Agency (FEMA), Hazard Mitigation Grant. Current Status: Corrected. The District prepared the Schedule of Expenditures and Federal awards consistent with revenue recognized for each federal program.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 635958 2022-001
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
10.760 Water and Waste Disposal Systems for Rural Communities $3.74M
97.039 Hazard Mitigation Grant $86,648
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $20,272