Finding Text
FINDING 2023-002: Audit Adjustments
Criteria - The Corporation’s management has the responsibility to record, process, and summarize the
accounting data to ensure that uses of the data have complete and accurate accounting records. Nonprofit organizations are also required to prepare financial statements in accordance with generally accepted accounting principles (GAAP). Condition - An adjustment was proposed to the financial statements to record the donation of a building and land with a total value of $2,180,000. Context - Management is responsible for the recording, processing, summarizing, and review of the accounting data (i.e. maintaining books and records) and for making the necessary adjustments to those books and records before the audit and preparation of the financial statements. Cause - The Corporation does not normally receive noncash contributions and does not have an established history of recording such transactions. The combination of the transition and the new or out of the ordinary transactions contributed to them not being recorded properly. Effect - Members of management, the Board of Directors, and any other users of the Corporation’s internal books and records did not have complete and accurate information. Recommendation - We recommend the Corporation establish procedures to regularly review out of the ordinary activities to ensure its accounting is complete and accurate. Auditee's comments and response - The Corporation has received property donations on occasion over the years. The donated property was not recorded at fair market value at the time of closing due to the timing of closing in December 2023, and the immediate transition of their financial controller early in January 2024. This omission was caught by the auditors prior to internal staff due to the key staff transition. Going forward the CEO and CFO will meet monthly to review financial statements and transactions and make sure all donations and other transactions are recorded according to accounting policies. Responsible party for corrective action: Lisa Fischer – Chief Operating Officer