SNOWSHOE SPRINGS ASSOCIATION

2021-001: Material Weakness ? Member Assessments Criteria Generally accepting accounting principles require member assessment revenue be recorded as revenue in the year the assessment applies. Condition The Association improperly recorded member assessment revenue when billed rather than when earned. Member assessments should be recognized in the year the assessment applies. The Association recorded the 2021 member assessments in fiscal year 2020. Effect The effect or potential effect could result in a misstatement of the financial statements due to fraud or error. Cause The Association recorded the 2021 member assessment revenue in the incorrect year as they were levied in the 2020 fiscal year. The Association did not know for certain how to ascertain the recordkeeping of each members account balance. The Association should of recorded the 2021 fiscal year assessments as revenue when received in fiscal year 2021 with any amounts paid before the fiscal year 2021 as deferred revenue. Recommendation We recommend the Association to review their annual members assessment policy and process to ensure revenue is recorded in the correct assessed year. Views of Responsible Official The Treasurer will institute a change in revenue recognition policy for member assessments by grossing up assessments receivable and deferred revenue at time of assessment. At year end, the Treasurer will ensure assessments receivable is eliminated and deferred revenue will contain only amounts received by year end for the subsequent assessment period.

2021-002: Material Weakness ? Recognition of Grant Revenue Criteria Generally accepting accounting principles require grant revenue to be recognized when the Association has performed all, or a substantial portion of the services provided under the terms of grant agreement. Condition There were services provided by the vendors of the Association associated with the water system project that were properly accrued as accounts payable as of March 31, 2021 but the associated grant monies to offset those costs were not accounted for as a grant receivable and revenue as of March 31, 2021. Effect The effect or potential effect could result in a misstatement of the financial statements due to fraud or error. Cause The Association is in discussions with the vendors to finalize the cost of the project and was unaware to record an offsetting grant receivable and revenue to properly reflect all costs and reimbursements from the USDA as of March 31, 2021. Recommendation We recommend the Association to review agreements to identify if funds received should be recognized as revenue in accordance with reimbursable grant contracts. Views of Responsible Official The Treasurer will institute a change in grant revenue recognition policy for any future grant reimbursable contracts.

2021-003: Significant Deficiency ? Accounts Payable Criteria Generally accepting accounting principles require accounts payable to be recorded as expenses in the year incurred. Condition The Association is currently not utilizing the accounts payable module component of its accounting software package. Effect The effect or potential effect could result in a misstatement of the financial statements due to fraud or error. Cause The Association did not adjust for accounts payable at fiscal year end as the Association does not record accounts payable but rather maintains its expenses on a cash basis. Recommendation We recommend that the Association utilize the accounts payable module within Quickbooks. Under this module, a vendor?s invoice is recorded in an open invoice journal upon receipt and approval. At any given point in time, a listing of open/unpaid invoices can be produced from the system. This listing would match all items in the open invoice file. This procedure would make available a monthly list of unpaid invoices through the accounting system and would allow for a much stronger control over the accounts payable and the amounts reflected in the financial statements. Views of Responsible Official The Treasurer will institute a change in policy to account for accounts payable at year end to be in accordance with generally accepted accounting principles.

2021-004: Significant Deficiency ? Segregation of Duties Criteria An organization should have a sufficient number of segregation of duty responsibilities to handle the Associations? daily activities. Condition A significant number of transactions of the Association are initiated, reviewed, approved, and executed by the Association Manager that effect all account balances and transaction cycles. This includes the ability to approve vendor invoices as well as drafting and signing checks for payment. Effect The effect or potential effect could result in a misstatement of the financial statements due to fraud or error. Cause Due to limited resources and size of the Association, the Association Manager has been granted significant influence and control over the financial reporting process of the Association. Recommendation We recommend the Association institute review and approval processes and reassign check signing authority to Board members of the Association. Views of Responsible Official The Treasurer will work with the Board of Directors to institute changes in the review and approval process including access to cash accounts.

2021-005: Significant Deficiency ? Payroll Oversight Criteria An organization should have a review and approval process over payroll when an organization has a domestic couple working together and one of the domestic couple (Association Manager) has review and approval as well as check signing authority over the other spouses payroll. Condition The Association does not have an individual outside the Association Manager review and approve payroll before processing weekly payroll. Effect The effect or potential effect could result in a misstatement of the financial statements due to fraud or error. Cause Due to limited resources and size of the Association, the Association Manager has been granted significant influence and control over the financial reporting process of the Association. Recommendation We recommend the Association have the Treasurer or other identified Board member review and approve payroll of all employees prior to processing weekly payroll. Views of Responsible Official The Treasurer will work with the Board of Directors to institute changes in the review and approval process of payroll.