Material weakness in internal control cited by Auditors
Auditors found material weakness in internal control of the general ledger and reporting process.
This is outlined in the 91-page audit report for fiscal Year 2022 ending September 30, 2022, prepared by Larson and Company, certified public accountants based in Utah.
According to the audit, the Territory does not have an adequate control system to ensure that the general ledger accurately reflects the account balances of the Territory on a monthly, quarterly, or annual basis.
Also, the territory's public ledger is not reconciled to subsidiary ledgers or source documents every month, nor is it closed or summarized in such a manner to accurately portray the accounts and activities of the Territory every month.
At year-end, the general ledger was not closed on time, and management or the auditors posted significant adjustments during and after fieldwork, January – March 2022. Adjusting entries of approximately $5.3 million were proposed and assigned to the general fund.
Changing entries of roughly $16 million were submitted and published to other funds. The Territory's control system does not include measures to ensure that accounting practices prepare the preparation of the Territory's financial statements and footnotes.
Similar findings have been reported in previous years that remain unaddressed. The Auditors recommended that ASG perform a monthly close process for all financial statement accounts.
Many errors or differences resulted from a lack of monitoring throughout the year. ASG should utilize the additional staff to have a high-level review of ALL financial statement accounts on a monthly schedule.
ASG should be able to produce timely and accurate financial reports at any time during the year and shortly after the close of the fiscal year.
They also strongly recommend that ASG re-contract with a Comptroller, whether on-island or off-island. This individual should be tasked with reviewing control processes and closing the Government's books at or shortly after year-end.
The financial accounts should be reconciled frequently, no less than quarterly. This will assist in completing the statements at year-end.
Accounts should be negotiated and closed no later than 60 days after year-end. This will allow for frequent, accurate, and timely financial reporting throughout the year and year-end.