Help with improving your financial processes
Did your audit report of deficiencies or findings note significant audit journal entries were required? What can I do to address this for future audits?
Many of these findings relate to accrual entries where revenues or expenditures were not recorded in the correct period. For example, if your year-end is June 30 and you receive an invoice in July for services provided in June, that expenditure needs to be booked back to June and recognized as an expenditure in the prior period even though it will be paid in the current period. Another example relates to franchise fee revenue. Typically, franchise fee revenue for the last quarter of your fiscal year is not received until you are a month or two into the new fiscal year. You will need to book the amount as a revenue and a receivable as of your year-end and, with the cash receipt, clear the receivable in the current fiscal year.
What about payments for services that are required before year-end but relate to the next year? These are considered prepaid expenses. The payment to the vendor is booked as a prepaid expense asset on the books. When the new year begins, you start expensing the cost in the current year monthly for the period of service.
If you still have questions regarding how to improve your financial processes, Maner Costerisan has accounting professionals that are familiar with all aspects of government accounting. We can help you understand and implement all controls and processes to address deficiencies noted during the audit. Please follow the link to find additional information… https://manercpa.com/niche-areas/governmental/ Give us a call 517.323.7500.