Council on Aging - Southern California

Finding 2022-002: Journal Entry and Account Reconciliations Review ? Significant Deficiency in Internal Control over Compliance See Schedule of Findings and Questioned Costs for chart/table Criteria: Evidence of journal entry reviews is a critical control to ensure that journal entries are being reviewed timely and with enough rigor to detect errors or fraud. Condition: We randomly selected 7 journal entries out of a population of 66 transactions using a nonstatistical sampling method representing costs charged to the award for the year ended June 30, 2022. Of the 7 selections we were unable to observe evidence of review and approval for 3 of the entries. Cause: Due to turnover within the organization and size of the accounting team, journal entries and account reconciliations review were not adequately documented. Effect or potential effect: The potential effect of not documenting reviews or journal entries or account reconciliations could allow journal entries or reconciliations to not be performed. Questioned costs: None Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that management complete and document reviews over all journal entries and account reconciliation throughout the fiscal year. Views of responsible officials: Management has implemented an immediate response to this significant deficiency as follows: Adjusting Journal Entries are to be requested by Accounting Manager(s) (or above) and booked into QuickBooks by a Staff Accountant. After a Staff Accountant has booked the journal entry into the accounting system, s/he will print out the AJE, and sign and date the journal entry. Staff Accountant will then provide the signed journal entry with supporting backup to the Accounting Manager (or above) for review and approval. Manager (or above) will approve journal entries by providing a physical signature on each journal entry. Staff Accountant will scan and file the signed journal entries into the document storage database. Bank reconciliations are to be performed by a Staff Accountant and provided to an Accounting Manager (or above) for review. The Accounting Manager (or above) will approve bank reconciliations by providing a physical signature on each reconciliation. Staff Accountant will scan and file signed reconciliations into the document storage database.

Finding 2022-002: Journal Entry & Account Reconciliations Reviews - Contact person responsible for corrective action: John Welsh, Director of Finance Expected date of corrective action: Immediate Management?s response: Management has implemented an immediate response to this significant deficiency as follows: Adjusting Journal Entries are to be requested by Accounting Manager(s) (or above) and booked into QuickBooks by a Staff Accountant. After a Staff Accountant has booked the journal entry into the accounting system, s/he will print out the AJE, and sign and date the journal entry. Staff Accountant will then provide the signed journal entry with supporting backup to the Accounting Manager (or above) for review and approval. Manager (or above) will approve journal entries by providing a physical signature on each journal entry. Staff Accountant will scan and file the signed journal entries into the document storage database. Bank reconciliations are to be performed by a Staff Accountant and provided to an Accounting Manager (or above) for review. The Accounting Manager (or above) will approve bank reconciliations by providing a physical signature on each reconciliation. Staff Accountant will scan and file signed reconciliations into the document storage database.