Finding Text
Finding SA 2022-01 Federal Agencies: U.S. Department of Education and U.S. Department of Agriculture Pass-through Entity: Pennsylvania Department of Education School Breakfast Program ? Assistance Listing #10.553 National School Lunch Program ? Assistance Listing #10.555 Education Stabilization Fund ? Elementary and Secondary Education ? Assistance Listing #84.425 Material Weakness in Internal Control Condition: During our audit procedures we noted that timely and complete monthly and annual financial account reconciliations did not take place during 2021-2022. This resulted in a backlog of transactions and journal entries that were not posted to the District?s accounting software. As a result, timely and complete financial information was not available for management and the Board of Directors to make well informed business decisions. Furthermore, the lack of timely and complete financial reconciliations resulted in material misstatements identified during our audit procedures. As a result, we proposed and management recorded journal entries to correct the misstatements that had a material effect on the District?s financial statements. Criteria: Statement on auditing Standards No. 115 "Communicating Internal Control Related Matters Identified in an Audit" ("SAS 115") focuses on how the auditor communicates matters related to internal controls to the client. One area SAS 115 emphasizes is internal control over financial reporting. Cause: The District did not properly follow its procedures of reconciling and closing its financial records on a monthly and annual basis. Effect: Errors and/or fraud can occur and not be detected and corrected on a timely basis. Although material errors were identified and adjusted during our audit procedures, no instances of fraud were detected as a result of our audit. Recommendation: Implement safeguards to ensure responsible business office employees are held accountable for following procedures to ensure timely and complete monthly and annual financial reporting.