Auditor general office yet to audit Cove Chapter’s financial statements

WINDOW ROCK – Cove Chapter’s last independent audit was in 2017, according to the auditor general’s office.

An internal audit report performed and completed by the Office of the Auditor General in June 2023, revealed the last independent financial statement was completed in 2017, the audit states.

Cove Chapter was certified in 2015 and obtained a financial statement audit for fiscals 2016 and 2017, which reported unmodified opinions. But the chapter financial operations for fiscals 2018 through 2022 have not yet been audited.
Therefore, the chapter is in violation.

Throughout the audit report, it does not state names and only respective individual’s titles with Cove Chapter.

The auditor general office recommends Cove chapter officials require the chapter manager to complete a financial statement every two years and should procure a certified public accountant in accordance with applicable policies and procedures, the audit states.

Violations of policies and procedures

“The Chapter is in violation of established policies and procedures,” the June 2023 audit states. “The 2017 audit identified three findings but the Chapter did not develop a corrective action plan to address the findings and based on this current audit, the issues remain unresolved.”

Certified chapters are given full responsibility for its finances and operations. However, without financial audits, chapters cannot provide assurance as their financial management system generates reliable and accurate financial statements, the audit states.

The Cove Chapter manager – and other chapter staff – who had been employed with the chapter since 2012, stated the financial audits were not conducted because of the COVID-19 pandemic. The report states only their respective titles.

The Cove Chapter budgeted funds for the fiscal 2022 financial statement audit, but as of the June 2023 audit, the chapter had not procured an audit firm, which causes a great concern, the report states.

Depreciation expenses for fiscals 2021 and 2022 have not been recorded in the accounting system, the report states.

A total fixed assets on the property inventory was $1,473,391 but the balance sheet reports $1,420,741, resulting in a variance of $52,650 in unreported assets. With the reported fixed assets, the report states it lacks supporting invoice and appraisal and have no support of how depreciation was determined.

The report states Cove Chapter staff misunderstood the required fixed asset value threshold and omitted other assets that should have been reported. In addition, the Cove Chapter manager did not know how to depreciate fixed assets and relied on a consultant to post depreciation information into the accounting system without source information.

The auditor general office recommends the Cove Chapter manager to obtain information and training on asset deprecation and should reconcile the fixed asset values reported in the monthly balance sheet against support documentation.

Work absences

According to the Fiscal Management Personnel Policies and Procedures, application for leave of any kind or duration must be initiated by the employee in writing and presented to the chapter manager for approval prior to taking leave.

The auditor general’s office reported Cove Chapter had issues of unapproved leave and compensatory time repeatedly since the findings of fiscal year 2017 financial statement audit.

The chapter’s workforce included permanent and temporary workers, which 40 payroll transactions totaling $31,066 were examined with no consistency in the process for tracking the work absences, the report states.

Only permanent staff like chapter managers and chapter administrative assistants are required to submit leave request forms of absences. According to the report, hours worked and not worked by Cove chapter employees were documented on sign-in sheets and signed by the employee to confirm the hours worked.

“There is no documentation to support the on-call status of employees including polices or work schedules,” the report states.

In the absence of consistency in tracking work absences, there is an increased risk that employees may record work hours that were not actually worked to the sign-in sheets. In addition, allowing compensatory time to be used without evidence that hours are earned indicate the misuse of funds, the report states.

The auditor general’s office recommends the Cove Chapter manager and secretary-treasurer should verify approved leave forms, compensatory time forms, and alternate work schedules reconcile to the timesheet prior to signing payroll checks.

Read the full story in the June 27, edition of the Navajo Times.

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