Finding Text
2023‐001 ‐ Proper General Ledger Posting, Reconciliations and Adequate Oversight
Criteria: Effectively designed and executed policies and procedures of financial processes should exist to ensure accurate recording of transactions to proper general ledger codes. Reconciliations and oversight should be designed and executed to ensure proper posting and detect errors on a timely basis.
Condition: Throughout the year, transactions were not consistently recorded to the correct general ledger code in accordance generally accepted accounting principles. Various receivables were recorded incorrectly as a reduction to deferred revenue and various liability transactions were recorded as a reduction to asset balances. Further, oversight did not detect such errors.
Cause: An inconsistent application of generally accepted accounting principles resulted in the Agency posting accounts receivable and deferred revenue transactions to the same balance sheet account potentially misstating asset and liability balances. This complicates reconciliation processes and coupled with fact that books and records were not reconciled with the final audited financials, result in users of the financials not having complete and accurate financials available for decision-making purposes.
Effect: The lack of accurate general ledger posting, reconciliations and adequate oversight led to material audit adjustments in the following areas: accounts receivable, accrued liabilities/accrued salaries, unemployment liabilities, deferred revenue, contract and grant revenues, and expenditures.
Recommendation: We recommend the management review current policies and procedures to ensure that transactions are posted to the proper general ledger account and regular oversight and reconciliation processes be enhanced. Such reconciliations and oversight should be completed before financial records are presented to executive management and the board for decision-making purposes.
Views of Responsible Official and Planned Corrective Actions: The Executive Director and Senior Director of Finance will engage with all team members whose responsibilities include posting to the OCO General Ledger; updates will be completed on the procedure to provide clarifications where needed. A general step by step process/guide for reviewing ledgers for common mistakes and methods of investigation will be incorporated into the procedure. Training will be completed for those who are authorized to post to the general ledgers and corrective actions will be issued as errors are identified. The Controller will continue to complete monthly reviews of the ledger in accordance with the updated procedures.