Finding Text
Finding 2022-001 – Timely and Accurate Books and Records Maintenance
Finding Type: Material Weakness
Criteria: Government Auditing Standards require that the financial statements be prepared in accordance with generally accepted accounting principles of the United States of America (“US GAAP”). These principles require that financial statements be prepared on the accrual basis of accounting which is US GAAP compliant because revenues and expenses are recorded and recognized in the period in which they occur.
Condition and Context: We noted the Organization was unable to provide timely and accurate financial statements for the period under audit and did not perform effective and ongoing reviews of its financial records to ensure they were in accordance with US GAAP. This resulted in the need to record adjusting journal entries.
Cause: The Organization did not perform accurate reviews of such accounts at year end and did not perform a review of the financial statements to ensure they were in accordance with US GAAP.
Effect and Potential Effect: This precludes the Organization from preparing financial statements in accordance with US GAAP and disclosure in compliance with professional standards.
Questioned Costs: None
Repeat Finding: Yes
Recommendation: We recommend the Organization hire an accounting manager-level employee with substantial knowledge of US GAAP and federal grant accounting, including required disclosures, to enable internal preparation of financial statements in accordance with the prescribed standards.