Finding Text
Criteria: The preparation of the financial statements and the related notes are the responsibility of management. Condition: Auditor is required to report on whether the Organization is able to prepare financial statements in accordance with GAAP. The preparation of financial statements in accordance with GAAP requires internal controls over both 1) recording, processing, and summarizing accounting data, and 2) the presentation of the organization?s financial statements, disclosures, supplementary information, schedule of federal and state financial assistance in conformity with generally accepted accounting principles (GAAP) of the United States. Internal control system does not include a process for preparing the annual financial statements and related disclosures in accordance with GAAP. The Organization?s ability to prepare financial statements in accordance with GAAP is based, in part, on its reliance on its external auditors, who cannot by definition be considered part of the Organization?s internal controls. Material adjustments were required to present the statements in accordance with GAAP. Cause: There are a limited number of office employees and resources available to allow for adequate preparation of the financial statements. Effect or Potential Effect: Potential for undetected errors, or material misstatements. Specifically adjustments related to investments, in-kind contributions and the recording of right to use assets in accordance with 842, were posted in order to present the statements in accordance with GAAP. Completeness of the financial statement disclosures and accuracy of the overall financial presentation are negatively impacted as outside auditors do not have the same comprehensive understanding of the Organization as its internal financial staff.Questioned Costs: None. Recommendation: The Organization should implement controls to ensure material adjustments are posted prior to the audit. Additionally, the Organization should continue to review the cost/benefit of utilizing the auditors to assist with the preparation of the financial statements. Views of Responsible Official: The Organization will implement controls to ensure material adjustments are posted prior to the audit. Additionally, the Organization will utilize the auditors to assist with the preparation of the financial statements prior to the audit. Any adjustments necessary for 2022 have been corrected as of the time of the audit completion with guidance from the auditors.