2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.
2021-002 Eligibility
Housing Voucher Cluster
Material Weakness in Internal Control
Material Noncompliance
Condition: Out of an approximate population of 17,110 tenants, 43 tenant files were tested and the following deficiencies were noted:
• Fifteen files did not have annual recertifications performed during the year,
• All files did not have 9886 release of information forms with 15 months of annual recertification,
• Six files did not have a 214 declaration form for all members of the household,
• Four tenant did not have the required form of identification documented,
• Two files did not have correct utility allowance calculation documentation,
• Twelve tenants did not have proper documentation for reported income,
• One file did not use the correct payment standard,
• Two files had an incorrect HAP calculation, and
• Three files had HAP from the 50058 annual recertification that did not match the HAP register.
Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files.
Context: The auditor randomly selected 43 tenant files out of the population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files.
Cause: The Authority experienced staffing and operational challenges during the onset of COVID and did not have the available staff to follow the established internal controls to ensure proper compliance with regards to timely recertifications and collection of required HUD documentation to verify eligibility and calculate accurate housing assistance payments.
Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided.
Questioned Costs: Unknown.
Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample.
Management Response: See Corrective Action Plan.
2021-002 Eligibility
Housing Voucher Cluster
Material Weakness in Internal Control
Material Noncompliance
Condition: Out of an approximate population of 17,110 tenants, 43 tenant files were tested and the following deficiencies were noted:
• Fifteen files did not have annual recertifications performed during the year,
• All files did not have 9886 release of information forms with 15 months of annual recertification,
• Six files did not have a 214 declaration form for all members of the household,
• Four tenant did not have the required form of identification documented,
• Two files did not have correct utility allowance calculation documentation,
• Twelve tenants did not have proper documentation for reported income,
• One file did not use the correct payment standard,
• Two files had an incorrect HAP calculation, and
• Three files had HAP from the 50058 annual recertification that did not match the HAP register.
Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files.
Context: The auditor randomly selected 43 tenant files out of the population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files.
Cause: The Authority experienced staffing and operational challenges during the onset of COVID and did not have the available staff to follow the established internal controls to ensure proper compliance with regards to timely recertifications and collection of required HUD documentation to verify eligibility and calculate accurate housing assistance payments.
Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided.
Questioned Costs: Unknown.
Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample.
Management Response: See Corrective Action Plan.
2021-002 Eligibility
Housing Voucher Cluster
Material Weakness in Internal Control
Material Noncompliance
Condition: Out of an approximate population of 17,110 tenants, 43 tenant files were tested and the following deficiencies were noted:
• Fifteen files did not have annual recertifications performed during the year,
• All files did not have 9886 release of information forms with 15 months of annual recertification,
• Six files did not have a 214 declaration form for all members of the household,
• Four tenant did not have the required form of identification documented,
• Two files did not have correct utility allowance calculation documentation,
• Twelve tenants did not have proper documentation for reported income,
• One file did not use the correct payment standard,
• Two files had an incorrect HAP calculation, and
• Three files had HAP from the 50058 annual recertification that did not match the HAP register.
Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files.
Context: The auditor randomly selected 43 tenant files out of the population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files.
Cause: The Authority experienced staffing and operational challenges during the onset of COVID and did not have the available staff to follow the established internal controls to ensure proper compliance with regards to timely recertifications and collection of required HUD documentation to verify eligibility and calculate accurate housing assistance payments.
Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided.
Questioned Costs: Unknown.
Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample.
Management Response: See Corrective Action Plan.
2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.
2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.
2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.
2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.
2021-002 Eligibility
Housing Voucher Cluster
Material Weakness in Internal Control
Material Noncompliance
Condition: Out of an approximate population of 17,110 tenants, 43 tenant files were tested and the following deficiencies were noted:
• Fifteen files did not have annual recertifications performed during the year,
• All files did not have 9886 release of information forms with 15 months of annual recertification,
• Six files did not have a 214 declaration form for all members of the household,
• Four tenant did not have the required form of identification documented,
• Two files did not have correct utility allowance calculation documentation,
• Twelve tenants did not have proper documentation for reported income,
• One file did not use the correct payment standard,
• Two files had an incorrect HAP calculation, and
• Three files had HAP from the 50058 annual recertification that did not match the HAP register.
Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files.
Context: The auditor randomly selected 43 tenant files out of the population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files.
Cause: The Authority experienced staffing and operational challenges during the onset of COVID and did not have the available staff to follow the established internal controls to ensure proper compliance with regards to timely recertifications and collection of required HUD documentation to verify eligibility and calculate accurate housing assistance payments.
Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided.
Questioned Costs: Unknown.
Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample.
Management Response: See Corrective Action Plan.
2021-002 Eligibility
Housing Voucher Cluster
Material Weakness in Internal Control
Material Noncompliance
Condition: Out of an approximate population of 17,110 tenants, 43 tenant files were tested and the following deficiencies were noted:
• Fifteen files did not have annual recertifications performed during the year,
• All files did not have 9886 release of information forms with 15 months of annual recertification,
• Six files did not have a 214 declaration form for all members of the household,
• Four tenant did not have the required form of identification documented,
• Two files did not have correct utility allowance calculation documentation,
• Twelve tenants did not have proper documentation for reported income,
• One file did not use the correct payment standard,
• Two files had an incorrect HAP calculation, and
• Three files had HAP from the 50058 annual recertification that did not match the HAP register.
Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files.
Context: The auditor randomly selected 43 tenant files out of the population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files.
Cause: The Authority experienced staffing and operational challenges during the onset of COVID and did not have the available staff to follow the established internal controls to ensure proper compliance with regards to timely recertifications and collection of required HUD documentation to verify eligibility and calculate accurate housing assistance payments.
Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided.
Questioned Costs: Unknown.
Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample.
Management Response: See Corrective Action Plan.
2021-002 Eligibility
Housing Voucher Cluster
Material Weakness in Internal Control
Material Noncompliance
Condition: Out of an approximate population of 17,110 tenants, 43 tenant files were tested and the following deficiencies were noted:
• Fifteen files did not have annual recertifications performed during the year,
• All files did not have 9886 release of information forms with 15 months of annual recertification,
• Six files did not have a 214 declaration form for all members of the household,
• Four tenant did not have the required form of identification documented,
• Two files did not have correct utility allowance calculation documentation,
• Twelve tenants did not have proper documentation for reported income,
• One file did not use the correct payment standard,
• Two files had an incorrect HAP calculation, and
• Three files had HAP from the 50058 annual recertification that did not match the HAP register.
Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete and accurate tenant files.
Context: The auditor randomly selected 43 tenant files out of the population, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files.
Cause: The Authority experienced staffing and operational challenges during the onset of COVID and did not have the available staff to follow the established internal controls to ensure proper compliance with regards to timely recertifications and collection of required HUD documentation to verify eligibility and calculate accurate housing assistance payments.
Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided.
Questioned Costs: Unknown.
Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample.
Management Response: See Corrective Action Plan.
2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.
2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.
2021-001 Delayed Financial Reporting
Material Weakness in Internal Control
Condition: During our audit of the Authority’s financial statements, numerous adjustments were needed to properly report the financial statements in accordance with generally accepted accounting principles. Certain accounts had not been properly reconciled and corrective entries were not readily available. Significant audit adjustments were necessary for several audit areas and the audit was significantly delayed due to these adjustments.
Context: We obtained the financial information from the Authority’s general ledger system. As part of our audit process, the financial information was compared to the unaudited submission sent to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (“REAC”). While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles and to reflect the data schedule in accordance with HUD requirements.
Criteria: In accordance with AU-C 265, when a deficiency or a combination of deficiencies in internal control is identified, which indicates that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis, a material weakness should be reported. In accordance with HUD rules and regulations, the Authority is required to have policies and procedures in place to ensure the submission of their audited financial information to REAC within 9 months after the fiscal year end.
Cause: The Authority was unable to maintain proper oversight of its financial closing processes and recording keeping during COVID. As a result the Authority did not have access to accurate closing schedules and was not able to implement the internal controls and processes to ensure that the general ledger and the unaudited REAC submission was complete and accurate.
Effect: The general ledger and the unaudited data submitted to REAC required numerous and material audit adjustments that delayed the audit, and therefore HUD could not provide proper timely financial oversight based on the unaudited REAC submission.
Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over both internal and external reporting, and the year-end close process to ensure reporting remains accurate and timely, with any unexpected financial data being investigated and corrected before it is reported. The Authority should consider additional staff training on development activities.
Management Response: See Corrective Action Plan.