Stake Audit automatic OTHER audit exception

A unit in our stake used the MLS transfer system to transfer funds from their Authorized Member-Financed Activities:OTHER: Girls Camp account to the stake's Authorized Member-Financed Activities:OTHER account late in the day on the last day of the audit period. Thus at midnight on the last day of the audit period there were funds in the Stake Member-Financed Activities:OTHER account.

The units can only transfer funds into that top level OTHER account. The next time we start the Stake MLS computer we use the MLS Transfers system to transfer those funds to the appropriate subcategory.

The 1st Half 2019 LUFAS audit system automatically looks for a balance in the Authorized Member-Financed Activities:OTHER account at end of day June 30th. If there is a balance, the church audit software automatically issues an audit exception. It did so in our instance.

Now the Stake President is left trying to figure out what to write in the three exception text boxes, basically how are we going to correct it and prevent it from happening again.

This same thing transfer issue has happened to our stake audit before on other occasions. In those instances human auditors saw funds in the top level OTHER account, we were able to show those funds were transferred late in the day on the last day of the audit period, we showed the auditor we knew what sub category they were for, and that within a few days of that transfer we transferred them into the correct subcategory. In those instances human auditors did not issue an audit exception.

In this instance the computer just says there is an exception, deal with it.

If we tried to honestly respond to the audit text box questions for this exception it gets bizarre. As of June 30th it took two member authentication to transfer funds between OTHER categories in our stake. Do we really want two people going to the stake center at midnight on the last day of the audit period with a combined travel time of about 3 hours to transfer any late incoming transfers to the proper sub account? Currently we cannot see those transfers on ChurchofJesusChrist.org for several hours after they occur. We can't even tell if there are any without going to the stake center.

Late in the day transfers from the units will continue to happen in our stake because our clerks are trying to square up their systems before the end of the audit period, plus OTHER funds are being transferred to the Stake at midyear time frame to cover major youth events such as Girls Camp and Youth Conference.

Seems like the audit department needs to rethink the criteria used to automatically issue audit exceptions for instances such as this one?

I would note although we can now enter transfers via LCR we do not see those transfers instantly. It can take a few hours out here. They are visible instantly on MLS. So we could be looking at LCR late in the night and not see any funds but they could be showing up on MLS. We may still be required to two man authenticate LCR transfers in the middle of the night.

gpolson wrote:Now the Stake President is left trying to figure out what to write in the three exception text boxes, basically how are we going to correct it and prevent it from happening again.

I would throw the exception right back where it belongs. I think perhaps the software could be programmed to look at how long a balance stays in the top-level AFMA:Other category during the last week or so of the audit period.

So, for the response to the audit --

How are we going to correct it:
"No correction required. The audit picked up a transfer in progress that took place between audit periods. The audit software did not pick up the completed action."

How are we going to prevent it from happening again:
"We cannot prevent it. There will always be unassigned funds in the AFMA:Other account between the time the transfer is originated by the ward and the time the stake transfers the funds to the correct sub-account. If this happens over the end of an audit period, the software is programmed to throw an exception which cannot be avoided. Since transfers received by the stake are assigned to sub-categories during the next MLS session, no change in procedure or further action is required."

So, for the response to the audit --

Thanks for your response.

It was more concise than what we came up with.

gpolson wrote:It was more concise than what we came up with.

Unless the form has changed, I think it is still to big for the box, but glad to help.

You might consider asking the chairman of your audit committee (a counselor in the stake presidency) to run this by your area auditor or assistant, There may be some influence there.

MLS would not allow a clerk transfer funds between sub categories in the "other" account. More recently, about March, LCR now allows the transfer not only between categories, but from t he other category to the Budget categories. I had the same issue when I initiated a transfer out of the other (main) category to ward budget. I did this in mind June. I got nailed on the audit because it showed up still in the Other category. Turns out it was on the Stake Presidents Dashboard as a transfer needing approval. He had never seen transfers before. I have since instructed my Ward Finance clerks throughout the Stake on how to correct/process these, and to alert their Bishop. Works fine and timely now.

We just did our ward audit. We haven't had any exceptions for awhile so the auditor said he'd find one for us because going too long without one was also a flag. The last auditor said the same thing.

chriswoodut wrote:We haven't had any exceptions for awhile so the auditor said he'd find one for us because going too long without one was also a flag. The last auditor said the same thing.

I would report that to the stake president.

russellhltn wrote:

chriswoodut wrote:We haven't had any exceptions for awhile so the auditor said he'd find one for us because going too long without one was also a flag. The last auditor said the same thing.

I would report that to the stake president.

Apparently that is a true thing in public auditing. Too perfect can be a sign of rigged books.

In our audit, he did find one minor thing. So, legitimate.

chriswoodut wrote:. . . the auditor said he'd find one for us because going too long without one was also a flag. The last auditor said the same thing.

If I were an auditor, I might joke about that, and I would certainly do a thorough audit.

But I am a firm believer that the way the Church audit system works, that is actually a sign that the ward knows what they are doing and is properly following all of the financial procedures as they should be following them.

It is different outside the Church. [Example omitted.]

I understand that a negative balance should trigger an exception....
i suppose I'm too dim to get why having a few bucks in an "other" account
represents an issue, let alone an exception... Not an accountant.

edbrimhallwilson wrote:I understand that a negative balance should trigger an exception....
i suppose I'm too dim to get why having a few bucks in an "other" account
represents an issue, let alone an exception... Not an accountant.

I'm not the original poster, so not sure about their situation. I'm guessing it is because it was in the top level category and not in a sub category labeled for a specific purpose. Our auditor once said having a balance in an Other account is not an exception. However, we received a letter this week to wards in our area with instructions to use the Other account appropriately. Not sure what people are doing to trigger that letter.

edbrimhallwilson wrote:i suppose I'm too dim to get why having a few bucks in an "other" account
represents an issue, let alone an exception... Not an accountant.

Just being positive isn't an issue. However, if the funds are at the "top level", it means they are not earmarked for a specific activity (scout camp, youth activity, whatever). That would be an exception as it goes against policy. You shouldn't have funds that are not earmarked for a purpose.

too dim to get why having a few bucks in an "other" account represents an issue, let alone an exception

The particular top level OTHER account is named Authorized Member-Financed Activities:OTHER . Units of the stake can transfer OTHER funds into it such as those for Girls Camp. Once they arrive, the stake transfers those funds down into the Stake Authorized Member-Financed Activities:OTHER: Girls Camp account Theoretically funds in that top level account are not specifically assigned to a purpose. That is the issue the audit computer software picked up on. In reality they were not unassigned. They were just in transition.