Finding Text
Finding 2023-02
Monthly and Annual Financial Reconciliation and Year End Closing Procedures
Material Weakness in Internal Control
Condition: During our audit procedures we noted that timely and complete monthly and annual financial account reconciliations did not take place during 2022-2023. This resulted in a backlog of transactions and journal entries that were not posted to the District’s accounting software. As a result, timely and complete financial information was not available for management and the Board of Directors to make well informed business decisions.
Criteria: Statement on auditing Standards No. 115 "Communicating Internal Control Related Matters Identified in an Audit" ("SAS 115") focuses on how the auditor communicates matters related to internal controls to the client. One area SAS 115 emphasizes is internal control over financial reporting.
Cause: The District did not properly follow its procedures of reconciling and closing its financial records on a monthly and annual basis.
Effect: Errors and/or fraud can occur and not be detected and corrected on a timely basis. Errors were identified during the year end close and as part of our audit that were corrected by management, but no instances of fraud were detected.
Recommendation: Implement safeguards to ensure responsible business office employees are held accountable for following procedures to ensure timely and complete monthly and annual financial reporting.
Management’s Response: Management will implement safeguards to ensure responsible business office employees are held accountable for following procedures to ensure timely and complete monthly and annual financial reporting.