Finding Text
SECTION II ? FINANCIAL STATEMENT FINDINGS 2022-001 Internal Control over Financial Close and Reporting (Material Weakness) ? Modified and Repeated (Prior Year Finding 2021-001) Condition: Account reconciliations were not performed timely and/or did not agree to the general ledger when performed. Accounts Payable and Accrued liabilities There were unsupported accounts payable and accrued liabilities balances for the School at year-end. The School lacks controls to ensure that accounts payable and accrued payroll liabilities are reconciled during the year or at year-end. During our review of the search for unrecorded liabilities and general disbursements, we noted cut-off exceptions for 7 out of 15 disbursements tested, totaling $122,874, the School booked expenses related to the current year in the next fiscal year. Fund Balance The School has recorded adjustments to correct ending balances for these accounts. Criteria: The School is responsible for maintaining adequate internal controls over its accounting records, account balances, and financial statement disclosures. Accounting records should include a complete, balanced general ledger that records all transactions that is supported by appropriate subsidiary records so that accurate financial statements can be prepared. Procedures should be in place to ensure that balance sheet accounts are independently reviewed and reconciled to the subsidiary records in a timely and effective manner. Cause: There was a lack of established internal controls and processes over the financial reporting process to ensure timely and accurate financial reporting. Effect: Without established and adequate internal controls and reconciliation procedures, the School?s balances lack certainty about the accuracy of the balances. Also, the probability that fraud or material errors will occur and go undetected generally increases. Auditor's Recommendation: We recommend management evaluate all aspects of the financial close and reporting process as well as the account reconciliation process and establish adequate internal controls and procedures to ensure timely and accurate financial statements and supporting schedules and to ensure timely compliance requirements are met. View Of Responsible Officials: The School agrees with this finding and has a plan in place to correct this.