UNITY FAMILY COMMUNITY CENTER, INCNon-Profit

Condition: Unity Family Community Center, Inc. did not utilize effective period end financial statement close procedures which enable the preparation of accurate financial statements and related disclosures. Specifically, we identified the following deficiencies in the procedures: ? Incorrect presentation of capital lease expenditures on the general ledger. ? Under statement of revenue and expenses due to failure to record in-kind contributions ? Under recording of revenue, expenditures, assets and liabilities due to failure to record yearend accruals. Criteria: The period end financial statement close procedures are the processes in which the results of all of the various transactions are summarized, reviewed, consolidated, edited and prepared in a timely and efficient manner into the financial reports. This process begins with the preparation of the trial balance and ends with the preparation of the year-end financial statements and related disclosures. The process includes closing the general ledger and preparing the trial balance, accumulating and posting journal entries, drafting the financial statements and disclosures and preparing required supplementary schedules. These procedures should be followed in order to facilitate the timely preparation of year-end financial statements in accordance with generally accepted accounting principles. Cause: Cash basis accounting was utilized during the year. Effect: An effective year-end financial reporting process was not followed that allowed for accurate yearend financial statements to be prepared. Recommendation: Unity Family Community Center, Inc. should review its current procedures related to the financial statement close process and determine the appropriateness of those processes for preventing and detecting misstatements and for preparing reliable, timely and accurate financial statements. Unity Family Community Center, Inc. should consider utilizing tools such as yearend entry checklists, GAAP disclosure checklists, mechanical checks of draft financial reports for accuracy, etc. to enhance and strengthen its existing procedures. Views of Responsible Officials: Management concurs and will utilize appropriate tools to prepare GAAP basis financial statements.