Minutes 03-21-2017 - Laserfiche WebLink

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9 Generally, expenditures/expenses should be recognized as soon as a liability is incurred, regardless of the timing of the related cash flows in accordance with generally accepted accounting principles. Misstatements were detected in the reporting of the County's expenditures/expenses and the related balance sheet accounts. Audit adjustments totaling approximately $6,354,000 were needed to correct the County's expenditures/expenses and related balance accounts. This included three adjustments to the prior financial statement amounts. 2016-002 Equity Reconciliation Internal controls should be in place to ensure that financial statements are properly presenting the financial position and results of operations of the County in accordance with generally accepted accounting principles. Internal controls were not sufficient to detect misstatements in the reporting of the opening net position balances of the County's Solid Waste Landfill Fund. An audit adjustment totaling approximately $760,000 was needed to correct the County's opening net position in the general ledger as of June 30, 2016. 2016-003 Capital Asset Reporting Internal controls should be in place to ensure the subsidiary ledgers for the County's capital assets, both governmental and business-type activities, include all capital assets purchased or constructed during the fiscal year. Additionally, subsidiary ledgers should be maintained to track the capital assets by cost and calculate annual depreciation amounts for the capital assets. Material misstatements were detected by County management in the reporting of the current year additions to the County's capital asset balances, as well as some previously unrecorded capital assets. Adjustments of approximately $4,140,000 were needed to correctly report the capital assets, including $1,023,000 of capital assets previously expensed in prior periods. 2016-005 Schedule of Expenditures of Federal and State Awards 2 CFR 200.302(b)(1) states that all nonfederal entities must identify in its accounts all federal awards received and expended. The schedule of expenditures of federal and state awards (SEFSA) should be derived from, and relate directly to, the underlying accounting and other records used to prepare the financial statements for the County. During the preparation of the schedule of expenditures of federal and state awards, it was noted the County was preparing the report based on revenues, rather than expenditures. The majority of the County's federal and state awards are related to health and human service grant activity, which is maintained outside of the County's finance department. As such, the County did not have procedures in place to permit for the reconciliation of the schedule of expenditures of federal and state awards to the underlying expenditures of the County. Ultimately the County was able to internally provide the necessary underlying records to support the expenditures reported on the schedule of expenditures of federal and state awards, but the reconciliation was performed with the Finance department and the department of Social Services working together to go through the general ledger and supporting to reconcile the activity of the County to the SEFSA. This process was not complete until January 2017. Significant Deficiency 2016-004 Segregation of Duties Segregation of employees' duties is a common practice in an effective internal control structure. Segregation of duties is achieved when specific employee functions related to important accounting areas are separated among different individuals to significantly reduce