ASG’s audit for Fiscal Year 2022 records the same material weakness in internal controls that has lingered from past years.
The audit by Larson and Company said the government does not have an adequate control system to ensure that the general ledger accurately reflects the account balances on a monthly, quarterly, or annual basis.
The auditors found, at year end, the general ledger was not closed on a timely basis and management or the auditors posted significant adjustments during and after field work from January to March 2022. Adjusting entries of about $5.3 million were proposed and or posted to the General Fund. Adjusting entries of about another $16 million were proposed and or posted to other funds.
The government’s control system does not include measures to ensure the preparation of the territory’s financial statements and footnotes were prepared in accordance with GAAP (General Accepted Accounting Procedures). Similar findings have been reported in previous years that remain unaddressed.
The result and effect is that the government’s accounts are not reconciled on a timely basis, and ASG is not able to produce accurate and timely financial statements. Certain general ledger accounts require significant adjustments after the books should have been closed.
The auditors recommend that ASG perform a monthly close process for all of the financial statement accounts. Many of the errors or differences noted result from a lack of monitoring throughout the year. “ASG should use the additional staff in order to have a high level review of all financial statements on a monthly schedule, and should be able to produce timely and accurate financial reports at any time during the year and shortly after the close of the fiscal year.”
The auditors strongly recommended that ASG re-contract with a Comptroller whether on-island or off-island.
ASG Treasury did not meet its action plan deadline that was submitted for the FY2021 audit and will, therefore, try again in Fiscal Year 2023.
Treasury’s corrective action plan proposes:
- Conduct a managers meeting with all divisions to update outdated closing procedures. Review and retrain staff in the accounting and grants division.
- After all entries have been posted to run a trial balance.
- Assign a fund trial balance to an accountant to review discrepancies. Any adjusting entries must be approved by the chief accountant or deputy treasurer.
- Run trial balance for final review by the treasurer or deputy treasurer.
