Finding Text
#2023-004 – Material Weakness: Independent Review and Approval
Condition and Criteria: Independent reviews and approvals are not performed for all significant accounting activities. A procedure should be in place for independent reviews and approvals of significant accounting activities. For all activities, no one individual should have access that allows initiating, recording, authorizing, and reconciling a transaction.
Cause/Context: The following transactions are performed without independent review and approval:
• Journal entries are posted without a review or approval process.
• Formal review of payroll registers is not documented.
• Invoices are not regularly reviewed and approved by appropriate department directors. Invoices are also entered into the general ledger with no independent review of the entry.
• Percentages used to allocate expenses across grants are not reviewed on at least an annual basis.
• Matching amounts required for grants are not independently tracked and reviewed to ensure compliance.
Effect: Unauthorized, erroneous, or inappropriate transactions could occur and go unnoticed.
Recommendation: The Organization should establish review procedures such that all transactions have proper approval.Views of Responsible Officials and Planned Corrective Actions:
The YWCA will implement the following changes in its accounting procedures:
1. Journal entries will be drafted by the Staff Accountant and reviewed by the CFO prior to being posted to the general ledger. The end-of-month-journal-entry spreadsheets will have spaces added for the CFO to indicate approval and date approved.
2. Payroll registers will be reviewed by the CFO each payroll. The end-of-month payroll entry (which encompasses all the payroll entries for the month) will be reviewed by the CFO prior to being uploaded to the MIP accounting software.
3. All invoices will be approved by the appropriate program director and account distribution will be reviewed by the CFO prior to entry into the accounts payable system. 4. Percentages used to allocate expenses across grants will be reviewed and updated annually at the beginning of the fiscal year. The allocation will be approved by the CEO.
5. Matching amounts for grants will be tracked and documented with supporting documentation by the Director of Finance and saved in the appropriate folder within the Finance SharePoint folder