Bank Reconciliation Condition: The bank reconciliations performed as of September 30, 2022 were not reconciled to the general ledger. Criteria: Bank reconciliations should be prepared at the end of each month, for each bank account and agreed to the general ledger. Cause: Transfers of cash between bank accounts were not properly reconciled at the end of the fiscal year. Effect: The combined bank reconciliations balances exceeded the general ledger cash balance by $54,588 as of September 30, 2022. As a result, the overall cash balance is understated. Recommendation: I recommend that bank reconciliations should be reconciled to the general ledger on a monthly basis and proper due to and due from accounts be established to account for the transfers. Performing these procedures will reduce the risk of an overdrawn or overstated bank balance, during the fiscal year. Views of Responsible Officials and Planned Corrective Actions: Springfield MHA will revise standard operating procedures so that bank reconciliations for the month of September of each fiscal year-ended September 30 will reflect balances in intercompany accounts receivables and intercompany accounts payables reported in accordance with HUD Accounting Brief 14 on the Financial Data Schedule as reconciling items on the bank reconciliations. For this fiscal year-end September 30, 2022, the reporting of such balances in accordance with HUD Accounting Brief 14 was only documented on trial balance worksheets that document mapping between trial balance numbers and the Financial Data Schedule. In addition, the Authority will implement controls to ensure all reconciling items are clearly documented on bank reconciliations performed monthly.
Financial Statements Condition: The year-end financial statements generated from the general ledger, that were prepared and presented for the audit contained inconsistencies, in comparison to the financial statements submitted to the Auditor of State, via the Hinkle Submission and the Entity Wide Balance Sheet and Entity Wide Revenue and Expense Summary, submitted via the Financial Assessment Subsystem. Criteria: The internal controls established by management, pertaining to the year-end financial statements should operate in a matter which should prevent or detect errors and inconsistencies. Cause: Lack of financial internal controls. Effect: ? Total assets per the financial statements generated from the general ledger were understated by $123,336. ? Total liabilities and net assets per the financial statements generated from the general ledger were understated by $123,336. ? Total revenue per the financial statements generated from the general ledger were understated by $4,619. ? Total expenses per the financial statements generated from the general ledger were understated by $48,409. Recommendation: I recommend that the Public Housing Authority should assess the adequacy of the design of its policies and procedures related to preparation of financial statements and the design appropriate controls as necessary to rectify inadequacies. Furthermore, the Public Housing Authority should consider where errors could occur that would cause a material misstatement in the financial statements and which policies or procedures would prevent or detect the error on a timely basis. Views of Responsible Officials and Planned Corrective Actions: Contributing to differences between the system generated financial statements and the financial statements prepared by the Authority for distribution include balances in accounts that typically have a balance that would appear on the Liability side of the Statement of Net Position, but in any given year have a balance reported on the Asset side of the Statement of Net Position, an example being the OPEB Net Asset. Balances of grants of short duration that for grant reporting purposes are maintained cumulatively in the general ledger for which only period amounts are reported on the Statement of Revenues, Expenses, and Change in Net Position is also an example of what can cause such differences. It is unknown by current management of Springfield MHA when the mapping for the financial statements generated by the Authority's accounting software was done or last updated. The financial statements generated by the Authority's accounting software are for very limited use by management only. They are not and were not generated for publication and distribution. For audit, Springfield MHA prepares trial balance worksheets that document mapping to the unaudited Financial Data Schedule, and then the totals from the unaudited Financial Data Schedule as adjusted (if applicable) provide the basis for the Financial Statements prepared for financial reporting and distribution. In addition to considering any mapping changes needed to system generated financial statements in the Authority's accounting software, Springfield MHA will consider how to label the financial statements generated by the accounting software as For Management Use Only.
Accounts Receivable - Tenants Condition: During the testing of accounts receivable tenants, there were twenty-two (22) instances out of twenty-six (26) transactions tested, whereby, the tenant balance reported on the Resident Ledger did not agree with the tenant balance reported on the Aged Receivable Report as of September 30, 2022. Criteria: The Resident Ledger should agree to the Aged Receivable report at the end of each month. Cause: The Resident Ledgers were not reconciled to the Aged Receivable report. Effect: The Aged Receivable report was overstated by $21,873. Recommendation: I recommend that the receivable balance reported on the Resident Ledger should be reconciled to the balance reported on the Aged Receivable tenant report. Performing this procedure will reduce the risk of the Aged Receivable tenant report, being overstated. Views of Responsible Officials and Planned Corrective Actions: Prior accounting management and staff have been removed. Accounts Receivable ? Tenants will be properly reconciled.
Tenant Files Condition: Housing Choice Vouchers Move-ins: 1. In two (2) instances out of ten (10) tenant files tested, the date on the lease agreement did not agreement to the effective move-in date. 2. In six (6) instances out of ten (10) tenant files tested, the lease agreement was not maintained in the tenant's file. 3. In one (1) instance out of ten (10) tenant files tested, the lease agreement did not indicate the initial lease date or the rent amount. 4. In ten (10) instances out of ten (10) tenant files tested, the "Lease Addendum" - Violence Against Women and Justice Department Reauthorization Act of 2005, was not signed by the Landlord. 5. In four (4) instances out of ten (10) tenant files tested, the HAP Contract was not signed by the Owner. 6. In three (3) instances out of ten (10) tenant files tested, the Tenancy Addendum was not maintained in the tenant's file. 7. In two (2) instances out of ten (10) tenant files tested, the Voucher expired prior to the issuance of the Request for Tenancy Approval. 8. In one (1) instance out of ten (10) tenant files tested, the "Reasonableness Valuation" form was not maintained in the tenant's file. 9. In one (1) instance out of ten (10) tenant files tested, the "Addition to Landlord and Tenant Lease" was not maintained in the tenant's file. Recertification: 1. In fifteen (15) instances out of twenty-five (25) tenant files selected for testing, that the notification of corrective actions was indicated to the Landlord, without indicating the number of days allowed for the correction. 2. In one (1) instance out of twenty-five (25) tenant files selected for testing, the annual recertification was not performed, during the 2022 fiscal year. 3. In one (1) instance out of twenty-four (24) tenant files selected for testing, the Authorization for the Release of Information (Form HUD-9886), was not dated by the tenant. 4. In two (2) instances out of twenty-four (24) tenant files selected for testing, the annual income was not verified in accordance to ?Part III: Verifying Income and Assets ? 7-III.A. Earned Income?. 5. In four (4) instances out of twenty-four (24) tenant files selected for testing, the inspection report maintained in the tenant's file, indicated that the inspection failed and/or was inconclusive; therefore, no Pass inspection was obtained, prior to the tenant?s effective move-in date. Move-outs: 1. In four (4) out of five (5) tenant files, selected for test, there was no notice sent to the landlord, indicating the termination date. Criteria: 1. Lease agreement must be signed by the tenant and landlord, prior to the PHA making a subsidy payment to the landlord. 2. Rent reasonableness must be determined and documented on a case-by-case basis that the approved rent is reasonable in comparison to rent for other comparable unassisted units in the market. The PHA will not approve a lease until the PHA determines that the initial rent to owner is a reasonable rent. 3. The Lease Addendum ? Violence Against Women and Justice Department Reauthorization Act of 2005 form, must be signed by the landlord and tenant, prior to the PHA making a subsidy payment to the landlord. 4. Passed inspection must be obtained, prior to the tenant occupying the housing unit. In addition, deficiencies must be reinspected within 30 days. 5. Once a family?s housing choice voucher term expires, the family is no longer eligible to search for housing under the program. 6. For verification of annual income, family must provide originals of up to the four most concurrent pay stubs. SS/SSI benefits, requires the PHA to request a current SSA benefit verification letter from each family member that receives social security benefits. 7. The HAP contract represents a written agreement between the PHA and the owner of the dwelling unit occupied by a HCV assisted family. 8. Authorization for the release of information form, must be signed and dated by the tenant, prior to the PHA requesting income information from the sources listed on the form. Effect: Potential questioned cost of $15,556.00. Context: Tenant files tested consisted of move-ins, recertifications and move-outs. Population Size Number: 899 tenant files Dollar Amount: $3,667,783. Sample Number: 40 tenant files tested Dollar Amount: $163,194. Items Not in Compliance Number: 15 non-compliance findings Dollar Amount: $15,556. Questioned Costs There were potential questioned costs of $15,556.00. Cause: Oversight by Management. Recommendation: In order to be in compliance with guidelines established by the Department of Housing and Urban Development, I recommend that Springfield Metropolitan Housing Authority 1) determines the rent reasonableness, prior to making a subsidy payment to the landlord; 2)obtain the tenant and landlord signature, prior to making a subsidy payment to the landlord; 3) obtain the lease-addendum ? violence against women form, prior to making a subsidy payment to the landlord; 4) The HAP should be signed by the tenant and the owner, prior to the tenant occupying the housing unit; 5) obtain the tenant?s signature and date on the authorization for release of information, prior to requesting household income information, and 6) Annual income should be verified by the PHA, prior to the tenant occupying the housing unit. By performing these procedures, the risk of incurring questioned costs will be significantly reduced. Views of Responsible Officials and Planned Corrective Actions: Springfield MHA will review all files from this audit to make necessary corrections. SMHA will review and update policy to ensure all program requirements are met.
Bank Reconciliation Condition: The bank reconciliations performed as of September 30, 2022 were not reconciled to the general ledger. Criteria: Bank reconciliations should be prepared at the end of each month, for each bank account and agreed to the general ledger. Cause: Transfers of cash between bank accounts were not properly reconciled at the end of the fiscal year. Effect: The combined bank reconciliations balances exceeded the general ledger cash balance by $54,588 as of September 30, 2022. As a result, the overall cash balance is understated. Recommendation: I recommend that bank reconciliations should be reconciled to the general ledger on a monthly basis and proper due to and due from accounts be established to account for the transfers. Performing these procedures will reduce the risk of an overdrawn or overstated bank balance, during the fiscal year. Views of Responsible Officials and Planned Corrective Actions: Springfield MHA will revise standard operating procedures so that bank reconciliations for the month of September of each fiscal year-ended September 30 will reflect balances in intercompany accounts receivables and intercompany accounts payables reported in accordance with HUD Accounting Brief 14 on the Financial Data Schedule as reconciling items on the bank reconciliations. For this fiscal year-end September 30, 2022, the reporting of such balances in accordance with HUD Accounting Brief 14 was only documented on trial balance worksheets that document mapping between trial balance numbers and the Financial Data Schedule. In addition, the Authority will implement controls to ensure all reconciling items are clearly documented on bank reconciliations performed monthly.
Financial Statements Condition: The year-end financial statements generated from the general ledger, that were prepared and presented for the audit contained inconsistencies, in comparison to the financial statements submitted to the Auditor of State, via the Hinkle Submission and the Entity Wide Balance Sheet and Entity Wide Revenue and Expense Summary, submitted via the Financial Assessment Subsystem. Criteria: The internal controls established by management, pertaining to the year-end financial statements should operate in a matter which should prevent or detect errors and inconsistencies. Cause: Lack of financial internal controls. Effect: ? Total assets per the financial statements generated from the general ledger were understated by $123,336. ? Total liabilities and net assets per the financial statements generated from the general ledger were understated by $123,336. ? Total revenue per the financial statements generated from the general ledger were understated by $4,619. ? Total expenses per the financial statements generated from the general ledger were understated by $48,409. Recommendation: I recommend that the Public Housing Authority should assess the adequacy of the design of its policies and procedures related to preparation of financial statements and the design appropriate controls as necessary to rectify inadequacies. Furthermore, the Public Housing Authority should consider where errors could occur that would cause a material misstatement in the financial statements and which policies or procedures would prevent or detect the error on a timely basis. Views of Responsible Officials and Planned Corrective Actions: Contributing to differences between the system generated financial statements and the financial statements prepared by the Authority for distribution include balances in accounts that typically have a balance that would appear on the Liability side of the Statement of Net Position, but in any given year have a balance reported on the Asset side of the Statement of Net Position, an example being the OPEB Net Asset. Balances of grants of short duration that for grant reporting purposes are maintained cumulatively in the general ledger for which only period amounts are reported on the Statement of Revenues, Expenses, and Change in Net Position is also an example of what can cause such differences. It is unknown by current management of Springfield MHA when the mapping for the financial statements generated by the Authority's accounting software was done or last updated. The financial statements generated by the Authority's accounting software are for very limited use by management only. They are not and were not generated for publication and distribution. For audit, Springfield MHA prepares trial balance worksheets that document mapping to the unaudited Financial Data Schedule, and then the totals from the unaudited Financial Data Schedule as adjusted (if applicable) provide the basis for the Financial Statements prepared for financial reporting and distribution. In addition to considering any mapping changes needed to system generated financial statements in the Authority's accounting software, Springfield MHA will consider how to label the financial statements generated by the accounting software as For Management Use Only.
Accounts Receivable - Tenants Condition: During the testing of accounts receivable tenants, there were twenty-two (22) instances out of twenty-six (26) transactions tested, whereby, the tenant balance reported on the Resident Ledger did not agree with the tenant balance reported on the Aged Receivable Report as of September 30, 2022. Criteria: The Resident Ledger should agree to the Aged Receivable report at the end of each month. Cause: The Resident Ledgers were not reconciled to the Aged Receivable report. Effect: The Aged Receivable report was overstated by $21,873. Recommendation: I recommend that the receivable balance reported on the Resident Ledger should be reconciled to the balance reported on the Aged Receivable tenant report. Performing this procedure will reduce the risk of the Aged Receivable tenant report, being overstated. Views of Responsible Officials and Planned Corrective Actions: Prior accounting management and staff have been removed. Accounts Receivable ? Tenants will be properly reconciled.
Tenant Files Condition: Housing Choice Vouchers Move-ins: 1. In two (2) instances out of ten (10) tenant files tested, the date on the lease agreement did not agreement to the effective move-in date. 2. In six (6) instances out of ten (10) tenant files tested, the lease agreement was not maintained in the tenant's file. 3. In one (1) instance out of ten (10) tenant files tested, the lease agreement did not indicate the initial lease date or the rent amount. 4. In ten (10) instances out of ten (10) tenant files tested, the "Lease Addendum" - Violence Against Women and Justice Department Reauthorization Act of 2005, was not signed by the Landlord. 5. In four (4) instances out of ten (10) tenant files tested, the HAP Contract was not signed by the Owner. 6. In three (3) instances out of ten (10) tenant files tested, the Tenancy Addendum was not maintained in the tenant's file. 7. In two (2) instances out of ten (10) tenant files tested, the Voucher expired prior to the issuance of the Request for Tenancy Approval. 8. In one (1) instance out of ten (10) tenant files tested, the "Reasonableness Valuation" form was not maintained in the tenant's file. 9. In one (1) instance out of ten (10) tenant files tested, the "Addition to Landlord and Tenant Lease" was not maintained in the tenant's file. Recertification: 1. In fifteen (15) instances out of twenty-five (25) tenant files selected for testing, that the notification of corrective actions was indicated to the Landlord, without indicating the number of days allowed for the correction. 2. In one (1) instance out of twenty-five (25) tenant files selected for testing, the annual recertification was not performed, during the 2022 fiscal year. 3. In one (1) instance out of twenty-four (24) tenant files selected for testing, the Authorization for the Release of Information (Form HUD-9886), was not dated by the tenant. 4. In two (2) instances out of twenty-four (24) tenant files selected for testing, the annual income was not verified in accordance to ?Part III: Verifying Income and Assets ? 7-III.A. Earned Income?. 5. In four (4) instances out of twenty-four (24) tenant files selected for testing, the inspection report maintained in the tenant's file, indicated that the inspection failed and/or was inconclusive; therefore, no Pass inspection was obtained, prior to the tenant?s effective move-in date. Move-outs: 1. In four (4) out of five (5) tenant files, selected for test, there was no notice sent to the landlord, indicating the termination date. Criteria: 1. Lease agreement must be signed by the tenant and landlord, prior to the PHA making a subsidy payment to the landlord. 2. Rent reasonableness must be determined and documented on a case-by-case basis that the approved rent is reasonable in comparison to rent for other comparable unassisted units in the market. The PHA will not approve a lease until the PHA determines that the initial rent to owner is a reasonable rent. 3. The Lease Addendum ? Violence Against Women and Justice Department Reauthorization Act of 2005 form, must be signed by the landlord and tenant, prior to the PHA making a subsidy payment to the landlord. 4. Passed inspection must be obtained, prior to the tenant occupying the housing unit. In addition, deficiencies must be reinspected within 30 days. 5. Once a family?s housing choice voucher term expires, the family is no longer eligible to search for housing under the program. 6. For verification of annual income, family must provide originals of up to the four most concurrent pay stubs. SS/SSI benefits, requires the PHA to request a current SSA benefit verification letter from each family member that receives social security benefits. 7. The HAP contract represents a written agreement between the PHA and the owner of the dwelling unit occupied by a HCV assisted family. 8. Authorization for the release of information form, must be signed and dated by the tenant, prior to the PHA requesting income information from the sources listed on the form. Effect: Potential questioned cost of $15,556.00. Context: Tenant files tested consisted of move-ins, recertifications and move-outs. Population Size Number: 899 tenant files Dollar Amount: $3,667,783. Sample Number: 40 tenant files tested Dollar Amount: $163,194. Items Not in Compliance Number: 15 non-compliance findings Dollar Amount: $15,556. Questioned Costs There were potential questioned costs of $15,556.00. Cause: Oversight by Management. Recommendation: In order to be in compliance with guidelines established by the Department of Housing and Urban Development, I recommend that Springfield Metropolitan Housing Authority 1) determines the rent reasonableness, prior to making a subsidy payment to the landlord; 2)obtain the tenant and landlord signature, prior to making a subsidy payment to the landlord; 3) obtain the lease-addendum ? violence against women form, prior to making a subsidy payment to the landlord; 4) The HAP should be signed by the tenant and the owner, prior to the tenant occupying the housing unit; 5) obtain the tenant?s signature and date on the authorization for release of information, prior to requesting household income information, and 6) Annual income should be verified by the PHA, prior to the tenant occupying the housing unit. By performing these procedures, the risk of incurring questioned costs will be significantly reduced. Views of Responsible Officials and Planned Corrective Actions: Springfield MHA will review all files from this audit to make necessary corrections. SMHA will review and update policy to ensure all program requirements are met.