Finding Text
SECTION II ? FINDINGS ? FINANCIAL STATEMENTS AUDIT 2022-001 ? Audit Adjustments Material weakness Criteria - Effective internal controls are designed to provide reasonable assurance regarding, amongst other things, the reliability of financial reporting. This means they should help CICC avoid material restatements of the financial statements. Condition - The financial statements for the year ended June 30, 2021, were restated during the current year to record two invoices for services provided in 2021 but not recorded until 2022. Both invoices were fully reimbursable by a government grant. Cause - The invoices were not received in a timely fashion by CICC and, once received, were recorded in the year in which they were paid. Effect - The invoices were not properly recorded in 2021, therefore a material prior period adjustment was made to correct in 2022. In addition, the related revenue and receivable for a government grant were not recorded. Recommendation - CICC should develop a process to track expenses incurred. Before the accounting records are closed for the year, a review should be performed to ensure expenses incurred prior to year-end are captured in the accounting records. Any expenses noted that required accrual should be reviewed for reimbursement eligibility and, if applicable, the related revenue should be accrued. Auditee?s comments and response - Management will review invoices in detail to ensure that they are recorded in the correct period. Responsible party for corrective action: Amy Petersen, Finance Manager