Audit 309918

Finding 2023-001 – Accounting Controls – Internal Controls over Financial Statement Preparation ALN 14.182 – Noncompliance and Significant Deficiency Criteria: Regulations at 2 CFR Part 200, Uniform Administrative Requirements, outline the internal control requirements for recipients of federal grant funds. Non-Federal entities must demonstrate, “Effective control over, and accountability for, all funds, property, and other assets.” A deficiency in internal control exists when the design or operation of a control does not allow management or its employees, in the normal course of operation, to detect or correct errors, fraud, or misstatements in a timely manner. The failure to properly implement internal control procedures can result in material misstatements of the account balances and noncompliance with grant oversight provisions. Condition: We noted the following deficiencies related to the maintenance of accounting records and the underlying internal controls: 1) Sale of off book property - The audit revealed that a property sale occurred during the fiscal year, but the transaction was not documented in the general ledger. Moreover, the property’s value was not recorded in the general ledger before its sale. We made an audit adjustment to accurately reflect the property sale and to correct cash and investments by $897,850. This was land owned by the Public Housing program that was released from the declaration of trust following the RAD conversion. The proceeds of the sale have been transferred to the appropriate RAD project. 2) Capital Assets - During the review of capital assets, we noted multiple items that should have been capitalized but they were mistakenly expensed. These adjustments amounted to a total addition of assets of $101,685. 3) Timely Submission of Financial Statements - the FASSUB Owner Certified submissions for Henderson Affordable Housing Corporation and RTS Affordable Housing Corporation were not submitted within 90 days of the fiscal year-end. Cause: Lack of internal controls in the area of financial reporting and in the review of the financial statements. The Authority hired an outside consultant to do the year end closeout of the financial statements. Effect: Improper balancing of accounts and accounting controls can result in misstated financial statements and improper financial information being communicated to management and to HUD. Recommendation: We recommend that year end internal control procedures be put in place to demonstrate effective oversight over account balances and grant activity. Questioned Costs: None Repeat Finding: No

Finding 2023-001 – Accounting Controls – Internal Controls over Financial Statement Preparation ALN 14.182 – Noncompliance and Significant Deficiency Criteria: Regulations at 2 CFR Part 200, Uniform Administrative Requirements, outline the internal control requirements for recipients of federal grant funds. Non-Federal entities must demonstrate, “Effective control over, and accountability for, all funds, property, and other assets.” A deficiency in internal control exists when the design or operation of a control does not allow management or its employees, in the normal course of operation, to detect or correct errors, fraud, or misstatements in a timely manner. The failure to properly implement internal control procedures can result in material misstatements of the account balances and noncompliance with grant oversight provisions. Condition: We noted the following deficiencies related to the maintenance of accounting records and the underlying internal controls: 1) Sale of off book property - The audit revealed that a property sale occurred during the fiscal year, but the transaction was not documented in the general ledger. Moreover, the property’s value was not recorded in the general ledger before its sale. We made an audit adjustment to accurately reflect the property sale and to correct cash and investments by $897,850. This was land owned by the Public Housing program that was released from the declaration of trust following the RAD conversion. The proceeds of the sale have been transferred to the appropriate RAD project. 2) Capital Assets - During the review of capital assets, we noted multiple items that should have been capitalized but they were mistakenly expensed. These adjustments amounted to a total addition of assets of $101,685. 3) Timely Submission of Financial Statements - the FASSUB Owner Certified submissions for Henderson Affordable Housing Corporation and RTS Affordable Housing Corporation were not submitted within 90 days of the fiscal year-end. Cause: Lack of internal controls in the area of financial reporting and in the review of the financial statements. The Authority hired an outside consultant to do the year end closeout of the financial statements. Effect: Improper balancing of accounts and accounting controls can result in misstated financial statements and improper financial information being communicated to management and to HUD. Recommendation: We recommend that year end internal control procedures be put in place to demonstrate effective oversight over account balances and grant activity. Questioned Costs: None Repeat Finding: No