Prepared and Presented By: Frank Crawford, CPA
www.crawfordcpas.com
frank@crawfordcpas.com
CRITERIA
 CONDITION
 CAUSE
 EFFECT
 RECOMMENDATION / BENEFIT
 MANAGEMENT RESPONSE
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What Should Be
For internal control findings, criteria is the
control element, policy or procedure that
should be designed and/or complied with
For compliance findings, the criteria is the
specific compliance requirement
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What Is or Has Happened
For internal control findings, condition is
a finding that an important control
element, policy or procedure is not
designed, or is designed but not
complied with
For compliance findings, the condition is
the specific finding or instance of
noncompliance
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Why the Condition Exists or Occurred
Cause is the most difficult element of a
complete finding to write; if not written well, it
will be difficult to understand; the writer of the
finding must use their best professional
judgment to determine cause
Cause may involve multiple issues such as lack
of priority, ability, resources, motivation, or may
involve intent
It is the most crucial element of the finding for
writing an effective recommendation for
corrective action
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What Has or Can Happen as a Result
Effect is important to communicate in order
to get the attention of the decision makers
Effect could involve the occurrence or
higher than acceptable risk of:
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Undetected errors
Undetected fraud
Financial losses
Increased liability
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What You Should Do About It
The “recommendation” must be specific and
complete if you expect the proposed
corrective action to be the right corrective
action and be effective
The “recommendation” is built upon the
proper identification of the “cause”
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Proposed Corrective Action or Inaction
Management’s response is important to
ensure the finding is not in error or to learn
that mitigating factors may exist
Auditors should let management know when
their proposed corrective action may not be
sufficient to correct the condition
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Types of Findings
◦ Internal control deficiencies
◦ Noncompliance
◦ Other matters
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Appropriate Reports
◦ Financial reporting on internal control, compliance
and other matters – financial statements (YB)
◦ Financial reporting on internal control and
compliance - A133 Single Audit
◦ Single audit schedule of findings and questioned
costs
◦ Management letter
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Controls over financial reporting
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Controls over compliance
◦ Significant deficiencies
◦ Material weaknesses
◦ Financial statements
 Significant deficiencies
 Material weaknesses
◦ Federal awards
 Significant deficiencies
 Material weaknesses
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Financial statements compliance
◦ Direct and material effect
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Federal awards compliance
◦ Material to a type of requirement of a major
program
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Potential fraud
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Indications of abuse
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Other operational or performance matters