A recurring weakness identified in annual ASG audits has again appeared in the findings of the Fiscal Year 2018 audit for ASG.
That is lack of a strong system of internal controls to ensure that the general ledger for ASG accurately reflects the account balances on a monthly, quarterly or annual basis.
Auditors, Larsons and Company PC OF Utah, said at year end, the general ledger was not closed on a timely basis and management or the auditors posted significant adjustments during and after fieldwork, January to March 2020.
Adjusting entries of about $6 million were proposed and or posted to the General Fund.
Adjusting entries of about another $6 million were proposed and or posted to other funds.
The auditors said the territory’s control system does not include measures to ensure that preparations of the territory’s financial statements and footnotes were prepared in accordance with GAAP, Generally Accepted Accounting Principles.
They also noted lack of a proper cutoff of payables at year end.
“There were significant invoices and services provided during the current period. These involves should be identified and accrued back to the correct period as a part of the closing process,” said the auditors.
ASG maintains spreadsheets for federal grants, grants receivables and deferred revenue expenditures on an annual basis and the amount of receivables due, or revenue deferred for each grant. However the spreadsheet does not reconcile to prior year receivables and deferred revenue as a beginning balance.
General ledger amounts are adjusted to match ending balances on the spreadsheet at closing.
The auditors said additional staff has been added and ASG has contracted with an external comptroller.
This has improved the process and reporting over the prior period.
However there are controls and processes that still need to be addressed, implemented and or adjusted to have a solid internal control reporting structure.
They recommend that ASG perform a monthly closing process for all of the financial statement accounts.
Many of the errors or differences noted result from a lack of monitoring throughout the year.
The auditors recommended ASG should utilize the additional staff and external comptroller in order to have a high level review of all financial statement accounts on a monthly schedule.
ASG should be able to provide timeLy and accurate financial reports at any time during the year and shortly after the close of the fiscal year.
ASG agreed with the finding. It responded: “Treasury Finance has reclassified personnel responsibilities with reinforcement on monthly deadlines. Accountants are to work closely with IT in reconciling the check register to the general ledgers with emphasis on voided checks and check cancellation.
“Due to large amounts of wire transfers processed daily, entries are to be booked on a daily basis. Newly assigned accountant for the Grant Fund is for monitoring the booking of cash receipts once received.
“Journal entries are to be given thorough review for accuracy before posting to avoid any major adjustments.”
