Finding Text
2023-004 FINANCIAL REPORTING Assistance Living Number 20.933 The Organization did not properly record expenditures related to the federal program. 2023-002 FINANCIAL REPORTING
Prior Year Finding Number 2022-002 Criteria
A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements of the financial statement of a timely basis. Properly designed policies and procedures and implementation of the policies and procedures are an integral part of ensuring the reliability and accuracy of the Organization’s financial statements.
Condition
Significant year-end adjusting entries were not properly recorded in the Organization’s financial statements primarily related to the receivables and payables for the Water Trails Project. Adjustments were subsequently made by the Organization to properly include these amounts in the financial statements.
Cause
Reporting financial data reliably in accordance with generally accepted accounting principles requires management to possess sufficient knowledge and training to select and apply accounting principles and prepare financial statements including footnote disclosures. Management presently lacks the proper procedures to identify year-end accruals for receivables and payables.
Effect
Lack of proper procedures for preparing financial statements resulted in Organization employees not detecting the errors in the normal course of performing their assigned functions. As a result, material adjustments to the Organization’s financial statements were necessary.
Recommendation
Management should continue to work on year-end closing procedures to properly identify receivables and payables at June 30. The Organization should continue to utilize accounting staff to assist with the financial accounting system entries and bank reconciliations.
Response
The MPO hired an in-house accountant at the beginning of FY 2023 who has been responsible for recordings. The Accountant has received training in QuickBooks and also has worked with accounting/auditing professionals to both clean up past recording errors and to improve practices moving forward.
Conclusion
Response accepted.