THE LAGUNA PLAYHOUSENon-Profit

Finding No. 2023-1: Lack of Timely, Accurate and Complete Account Analysis and Reconciliation Type of Finding: Material Weakness Material Weakness Criteria: AICPA AU-C 265.07 defines a material weakness as ?a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity?s financial statements will not be prevented, or detected and corrected, on a timely basis. A reasonable possibility exists when the likelihood of an event occurring is either reasonably possible or probable as defined as follows: reasonably possible - the chance of the future event or events occurring is more than remote but less than likely; probable - the future event or events are likely to occur.? The Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the Internal Control ? Integrated Framework (2013 Framework) defined internal control as ?? a process, effected by an entity?s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance. Condition: Cash accounts were not consistently reconciled; accounts receivable ledgers contained inaccurate activities; depreciation expenses were incorrectly posted; capitalizable assets were improperly expensed; accounts payable and accrued expenses were not complete at fiscal year-end; net assets did not properly roll-forward from the prior fiscal year. Cause: Internal controls were inadequate over the above-mentioned processes. Effect: Numerous audit adjusting entries were required to present the Playhouse?s June 30, 2022 financial statements in accordance with generally accepted accounting principles in the United States. Repeat Finding from Prior Year: Not applicable.