Finding Text
2023-01 (Material Weakness )
Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected.
Condition: Current year activity in fixed assets were not properly recorded. Expenditures to improve buildings was erroneously recorded to repairs account, gain on sale of building improperly calculated, and depreciation expense was not recorded.
Context: Deficiency was discovered while performing substantive testing on repairs and maintenance and fixed asset accounts.
Effect: Material misstatements in the financial statements were not detected in a timely manner.
Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year in part due to the short interim period between finishing prior audit and starting current year audit. Historically, Organization has not recorded depreciation
Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions.
This is a repeat finding
Response: We acknowledge that there is currently not a sufficient process in place to ensure that capital expenditures and depreciation are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and depreciation are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.