Finding Text
Finding #2023-002 – Material Adjustments (Prior Year Finding #2022-002)
Condition: Johnson Block and Company, Inc. proposed numerous adjusting journal entries to adjust District account balances. We deem these entries to be significant in relation to the financial statements. Since the District did not make these adjustments in the accounting system prior to the audit, a material weakness exists in the District’s internal controls.
Effect: This means that the proper recording and reporting of financial information may not occur within a timely manner.
Cause: Financial information was not recorded in a timely manner and material adjustments were needed in order to correct various transactions.
Criteria: Material adjusting journal entries not prepared by the District before the audit are considered an internal control weakness.
Recommendation: Policies and procedures should be implemented to ensure account balances are properly recorded in a timely manner.
Response: The District will work to establish policies and procedures to reduce the number of adjusting journal entries proposed by the auditor.