Agenda - 10-18-2007-1 - Laserfiche WebLink

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Memorandum No. 1077 August 1, 2007 Page 7 of 7 Appendix B List of common controls evaluated for deficiencies Based on the lists provided in SAS No. 112, these deficiencies may be commonly noted. • Ineffective overs~ht of the entity's financial reporting and internal control by those charged with governance. • Restatement of previously issued financial statements to reflect the correction of a material misstatement, which includes misstatements due to error or fraud. • Controls over the period-end financial reporting process, including controls over procedures used to enter transaction totals in the general ledger; initiate, authorize, record, and process journal entries into the general ledger; and record recurring and nonrecurring adjustments to the financial statements. • Inadequate design of internal control over a significant account or process. • Inadequate design of monitoring controls used to assess the design and operating effectiveness of the entity's internal control over time. • Inadequate documentation of the components of internal control. • Failure in the operation of effectively designed controls over a significant account or process. • Insufficient control consciousness within the organization, for example, the "tone at the top" and the control environment. • Failure by management or those charged with governance to assess the effect of a significant deficiency previous communicated to them and either correct it or conclude that it will not be corrected. • Absent or inadequate segregation of duties within a significant account or process. • Controls over the selection and application of accounting_princi les that are in conformity with generally accepted accounting principles. Having sufficient expertise in selecting and applying accounting principles is an aspect of such controls. • Employees or management who lack the qualifications and training; to fulfill their assigned functions. For example, in an entity that prepares financial statements in accordance with generally accepted accounting principles, the person responsible for the accounting and reporting function lacks the skills and knowledge to apply generally accepted accounting principles in recording the entity's financial transactions or preparing its financial statements. • Failure of the information and communication component of internal control to provide complete and accurate output because of deficiencies in timeliness, completeness, or accuracy; for example, the failure to obtain timely and accurate consolidating information from remote locations this needed to prepare the financial statements. • Failure of controls designed to safeguard assets from loss damage, or misappropriation. • Failure to perform reconciliations of significant accounts. For example, accounts receivable subsidiary ledgers are not reconciled to the general ledger account in a timely'or accurate manner.