Finding 978828 (2023-002)

2023-002 Material Adjustments Criteria: Management is responsible for reconciling the accounts during the year and at year end in order to generate financial statements that are in accordance with Generally Accepted Accounting Principles. Condition: Insufficient controls over financial reporting resulted in material adjustments being required to prevent the Entity’s financial statements from being materially misstated. Context/Cause: The Entity relied on auditors to propose entries after audit procedures and had not recorded entries needed at the time of the audit. Effects: Lack of internal controls over balance sheet account reconciliations and adjustments could result in undetected errors and irregularities and misstated interim financial reports. Recommendation: We recommend that management maintain reconciliations on a monthly basis to keep balance sheet accounts reconciled and correct and to document which accounting procedures are needed and when they should be performed on a recurring basis to detect material adjustments that are required. Auditee’s Response: The Entity will incorporate financial reporting internal controls to detect material adjustments, prevent materially misstated financial statements,and increase the accuracy of interim financial reports used by management.