Finding Text
Finding Number: 2022-002 Material Weakness in Internal Controls over Financial Reporting - Financial Statement Adjustments and Presentation Federal Agency: U.S. Department of Education Compliance Requirement/ Description: Internal control deficiency over Financial Reporting; Financial Statement Adjustments and Presentation ? Material Weakness Criteria 2 CFR 200.516(a) requires that recipients? financial management system provides for the following: 1) Accurate, current and complete disclosure of the financial results of each federally sponsored project or program in accordance with the reporting requirements set forth in Section 215.52. 2) Effective control over and accountability for all funds, property and other assets. Recipients shall adequately safeguard all such assets and assure they are used solely for authorized purposes. Condition Audit adjustments were required to be posted to the District?s general ledger and entity wide financial statements to properly reflect its financial position and financial activity for the year under audit. Although much of the information for the adjustments was provided by the District, the fact that these adjustments were required to be posted for the financial statements and Schedule of Expenditure of Federal Awards to be properly stated constitutes a deficiency in the District?s financial reporting processes. The District was unable to provide final financial statements for PDE?s Annual Financial Report (AFR) and entity wide statements without guidance from the auditor. In connection with the audit of the District?s financial statements, management has requested that we assist in the drafting of the financial statements, required supplementary information, and related footnote disclosures. No population was tested; the finding is based upon understanding and review of the internal control system. Cause Although the District?s internal accounting personnel can interpret and understand its financial statements, both fund and entity wide, there were a number of entries that needed clarification by the auditor at year end to prepare those financials in accordance with GAAP. Finding Number: 2022-002 Material Weakness in Internal Controls over Financial Reporting - Financial Statement Adjustments and Presentation (Continued) Effect Greater opportunity for error in the preparation of the Schedule of Expenditures of Federal Awards and no assurance that errors will be detected and corrected on a timely basis. The District?s financial position and financial activity as of and for the year ended June 30, 2022, were not properly stated until the adjustments were posted to the general ledger. Questioned Costs Unknown Recommendation The District should continue to evaluate its year end procedures to reconcile and post the additional entries required as part of the year-end closing process and not as audit adjustments. Prior Year Finding No Auditee Response and Corrective Action Plan See attached response.