Finding Text
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.