Finding Text
Finding 2022-001: Reconciliation of Asset and Liability Accounts Federal Programs: All Programs Criteria: As stated in 2 CFR 200.303, the non-Federal entity (i.e. the Consolidated Entity) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or in the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: At the commencement of our audit fieldwork, we noted that some asset and liability accounts were not properly reconciled as of September 30, 2022. We also noted some schedules and reconciliations were not available for examination at commencement of audit fieldwork and/or were inaccurately prepared including accrued expenses, prepaid expenses, employee advances, bureaus bank reconciliations, fixed assets and deferred rent accounts, which resulted in a significant delay in the audit process. Account reconciliations are a key basic internal control for any organization. Without such reconciliations, the financial reports generated are likely to be inaccurate and unreliable. We also noted a couple of reconciliations were not substantiated by either supporting documents or details to support the balance of the account. Cause: The Consolidated Entity did not have the proper internal controls in place to ensure timely and accurate reconciliation of its asset and liability accounts. Effect or Potential Effect: Without timely and accurate reconciliation of asset and liability accounts, there exists the potential for undetected errors or misappropriation of funds, as well as internal consolidated financial statements that are incomplete, inaccurate and unreliable. Questioned Costs: None noted. Context: Asset and liability account reconciliations were not performed adequately and/or on a timely basis. Identification as a Repeat Finding: 2021-001 Recommendation: We recommend that procedures for reconciling all accounts on a monthly basis be strengthened and made a priority. A monthly closing checklist may be a useful tool to document the performance of these control procedures and to ensure that each person?s assigned responsibilities are being performed in a timely manner in the proper format.