Finding Text
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.