Audit 346137

Audit Finding 2024-001 – Lack of Segregation of Duties Criteria: Internal control is a process, affected by the Housing Authority of the City of Shawano's (the Authority) board of commissioners, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. A good system of internal control provides for an adequate segregation of duties so that no one individual handles a transaction from its inception to completion. Condition: Due to the limited employees and resources available to the Authority, many aspects of the internal control structure that rely on segregation of duties are missing. Specific accounting processes noted that are affected by the lack of segregation of duties include: cash disbursements, payroll disbursements, cash receipting, and specific reporting functions required for the Authority. Cause: Due to the limited number of personnel within the Authority, segregation of the accounting functions necessary to ensure adequate internal accounting control is not possible. This is not unusual in operations the size of the Authority; however, management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from an accounting point of view. Effect: Inadequate segregation of duties could adversely affect the Authority’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by personnel in the normal course of performing their assigned functions. Recommendation: We recommend that the Authority’s board of commissioners and management be aware of the lack of segregation of the accounting functions and, where possible, implement oversight procedures to ensure the internal control policies and procedures are being implemented by personnel to the extent possible. View of Responsible Officials: Management agrees with the finding.

Audit Finding 2024-002 – Return of Excess Interest Criteria: Code of Federal Regulations § 200.305 (b)(9) requires a recipient or subrecipient to retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Condition: During the audit, we noted the Authority did not pay back their excess interest income earned on Federal funds. Cause: The Authority was not aware it had to payback the excess interest earned on Federal funds. Effect: The Authority is not in compliance with Code of Federal Regulations § 200.305 (b)(9). Recommendation: We recommend that the Authority payback the excess interest and monitor the interest earned in the following years and payback any excess amounts. View of Responsible Officials: Management agrees with the finding.

Audit Finding 2024-003 – Timely Funds Disbursements Criteria: Code of Federal Regulations § 200.305 (b) requires that for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Code of Federal Regulations § 200.305 (b)(1) requires that advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: During the audit, we noted the Authority did not disburse their funds within a timely manner. Cause: The Authority did not disburse the CFP funds held in unearned revenue before drawing new funds. Effect: The Authority is not in compliance with Code of Federal Regulations § 200.305 (b) and Code of Federal Regulations § 200.305 (b)(1). Recommendation: We recommend that the Authority disburse their funds in a timely manner. View of Responsible Officials: Management agrees with the finding.

Audit Finding 2024-001 – Lack of Segregation of Duties Criteria: Internal control is a process, affected by the Housing Authority of the City of Shawano's (the Authority) board of commissioners, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. A good system of internal control provides for an adequate segregation of duties so that no one individual handles a transaction from its inception to completion. Condition: Due to the limited employees and resources available to the Authority, many aspects of the internal control structure that rely on segregation of duties are missing. Specific accounting processes noted that are affected by the lack of segregation of duties include: cash disbursements, payroll disbursements, cash receipting, and specific reporting functions required for the Authority. Cause: Due to the limited number of personnel within the Authority, segregation of the accounting functions necessary to ensure adequate internal accounting control is not possible. This is not unusual in operations the size of the Authority; however, management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from an accounting point of view. Effect: Inadequate segregation of duties could adversely affect the Authority’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by personnel in the normal course of performing their assigned functions. Recommendation: We recommend that the Authority’s board of commissioners and management be aware of the lack of segregation of the accounting functions and, where possible, implement oversight procedures to ensure the internal control policies and procedures are being implemented by personnel to the extent possible. View of Responsible Officials: Management agrees with the finding.

Audit Finding 2024-002 – Return of Excess Interest Criteria: Code of Federal Regulations § 200.305 (b)(9) requires a recipient or subrecipient to retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Condition: During the audit, we noted the Authority did not pay back their excess interest income earned on Federal funds. Cause: The Authority was not aware it had to payback the excess interest earned on Federal funds. Effect: The Authority is not in compliance with Code of Federal Regulations § 200.305 (b)(9). Recommendation: We recommend that the Authority payback the excess interest and monitor the interest earned in the following years and payback any excess amounts. View of Responsible Officials: Management agrees with the finding.

Audit Finding 2024-003 – Timely Funds Disbursements Criteria: Code of Federal Regulations § 200.305 (b) requires that for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Code of Federal Regulations § 200.305 (b)(1) requires that advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: During the audit, we noted the Authority did not disburse their funds within a timely manner. Cause: The Authority did not disburse the CFP funds held in unearned revenue before drawing new funds. Effect: The Authority is not in compliance with Code of Federal Regulations § 200.305 (b) and Code of Federal Regulations § 200.305 (b)(1). Recommendation: We recommend that the Authority disburse their funds in a timely manner. View of Responsible Officials: Management agrees with the finding.