Finding Text
Criteria : Financial statements are required to present correct classification of expenses. The Statement of Financial Position, Statement of Activities and Statement of Functional Expenses are affected by the incorrect expense cut-off. Condition : During the audit, auditors noted that year-end accruals related to payroll expense, vacation and related payroll taxes were missing or incorrect. As a result, salaries and wage and payroll tax expenses for the year ended December 31, 2022 were understated.
Cause: The Organization incorrectly calculated or missed year-end accruals related to its payroll.
Effect : Without accurate financial information, financial reports may be misstated and management may be unable to make informed decisions.
Recommendation : We recommend that the Organization's management implements year-end procedures to ensure proper expense cut-off to have all accruals recorded as liabilities at year end.