Audit 324135

Finding 2024-003: Internal Control Structure Capital Funds – 14.872 Material Weakness – Activities Allowed and Unallowed, Cash Management, Period of Performance and Special Tests and Provisions Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Capital Funds program. Condition: The Authority has limited employees which makes it difficult for the Authority to have controls beyond the Executive Director's knowledge. As a result, we noted the following deficiencies related to the internal control components which are considered a material weakness: • Control Activities — The Authority only had the one staff that handles the Capital Fund program so the Authority has no controls over compliance beyond the Executive Director's knowledge. • Information and Communication — Communication involves providing an understanding of individual roles and responsibilities pertaining to internal control over financial reporting The Authority had not formally documented the procedures as a reference point for employees to perform their duties. Further, internal control procedures should be documented so that the controls in place can be monitored. Cause: The Authority has limited resources and one staff. Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected Recommendation: As noted above, the Authority has limited resources and additional controls are not financially feasible in the hiring of additional staff. In addition, the Board of Commissioners is considered a governing Board and the Board performing management or day-to-day activities is not recommended based on our previous experience and is not intended to be a solution to this situation. The Authority is a small entity and the lack of segregation of duties is common among entities with minimal employees and should be recognized as such. However, it is not our intent to establish internal controls as the Authority's Board should make the final determination in the cost versus benefit. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.

Finding 2024-004: Capital Fund Grant Cash Management Capital Funds – 14.872 Material Weakness/Noncompliance – Cash Management Criteria: The Agency is not allowed to pay for capital fund transactions until funds are vouchered and disbursed from LOCCS. Further, the funds must then be disbursed within 3 business days (3-day Treasury Rule) of the funds being deposited into the Agency’s bank account from LOCCS. Condition: They Agency had $252,498.27 of capital fund expenses during the year of which $35,129 were used for operations. Of the remaining $217,369.27 of expense, we tested $216,767.85 for compliance which included 19 disbursements. Of the 19 disbursements, we only noted 1 transaction for $11,899 where the funds were advanced and expended in accordance with the rules above. Cause: The Agency had adequate balances in its checking account where it was able to pay for the items without advancing the funds. Further, the responsibility for advancing the funds was the responsibility of one individual without proper oversight and due to time constraints, advancing funds in LOCCS was not prioritized. Effect or Potential Effect: The Agency did not comply with the cash management requirements. Recommendation: The Agency should establish procedures where capital funds are advanced when expenditures are to be made. The Agency should establish a system where the Executive Director can monitor the advances and related expenditure of the grant funds are occurring within the required timeframe. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.

Finding 2024-003: Internal Control Structure Capital Funds – 14.872 Material Weakness – Activities Allowed and Unallowed, Cash Management, Period of Performance and Special Tests and Provisions Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Capital Funds program. Condition: The Authority has limited employees which makes it difficult for the Authority to have controls beyond the Executive Director's knowledge. As a result, we noted the following deficiencies related to the internal control components which are considered a material weakness: • Control Activities — The Authority only had the one staff that handles the Capital Fund program so the Authority has no controls over compliance beyond the Executive Director's knowledge. • Information and Communication — Communication involves providing an understanding of individual roles and responsibilities pertaining to internal control over financial reporting The Authority had not formally documented the procedures as a reference point for employees to perform their duties. Further, internal control procedures should be documented so that the controls in place can be monitored. Cause: The Authority has limited resources and one staff. Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected Recommendation: As noted above, the Authority has limited resources and additional controls are not financially feasible in the hiring of additional staff. In addition, the Board of Commissioners is considered a governing Board and the Board performing management or day-to-day activities is not recommended based on our previous experience and is not intended to be a solution to this situation. The Authority is a small entity and the lack of segregation of duties is common among entities with minimal employees and should be recognized as such. However, it is not our intent to establish internal controls as the Authority's Board should make the final determination in the cost versus benefit. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.

Finding 2024-004: Capital Fund Grant Cash Management Capital Funds – 14.872 Material Weakness/Noncompliance – Cash Management Criteria: The Agency is not allowed to pay for capital fund transactions until funds are vouchered and disbursed from LOCCS. Further, the funds must then be disbursed within 3 business days (3-day Treasury Rule) of the funds being deposited into the Agency’s bank account from LOCCS. Condition: They Agency had $252,498.27 of capital fund expenses during the year of which $35,129 were used for operations. Of the remaining $217,369.27 of expense, we tested $216,767.85 for compliance which included 19 disbursements. Of the 19 disbursements, we only noted 1 transaction for $11,899 where the funds were advanced and expended in accordance with the rules above. Cause: The Agency had adequate balances in its checking account where it was able to pay for the items without advancing the funds. Further, the responsibility for advancing the funds was the responsibility of one individual without proper oversight and due to time constraints, advancing funds in LOCCS was not prioritized. Effect or Potential Effect: The Agency did not comply with the cash management requirements. Recommendation: The Agency should establish procedures where capital funds are advanced when expenditures are to be made. The Agency should establish a system where the Executive Director can monitor the advances and related expenditure of the grant funds are occurring within the required timeframe. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.