Finding Text
Financial Statement Preparation and Disclosures
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 statements on 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 Village's financial
statements.
Condition: Accounting personnel do not prepare financial statements m accordance with the
modified cash basis of accounting.
Cause: The Village's management presently lacks the qualifications and training to appropriately
fulfill these responsibilities, which is a common situation in small governmental entities.
Effect: Financial statement misstatements or disclosure omissions may exist and would not be
detected and corrected by management in a timely manner.
Recommendation: Obtaining additional modified cash basis knowledge through reading relevant
accounting literature and attending local professional education courses should help
management significantly improve in their ability to prepare and take responsibility for reliable
modified cash basis financial statements.
Response: The Village will review the recommendations and, additionally, will look for classes/
courses offered by institutions to receive more training.
Conclusion: Response accepted.