Audit 349610

Audit Finding 2024-001 – Lack of Segregation of Duties Criteria: Internal control is a process, affected by the Traverse City Housing Commission'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 2024-003 – Depository Agreements Criteria: Code of Federal Regulations § 982.156 requires depository agreements to be deposited with a financial institution selected as depositary by the PHA in accordance with HUD requirements. Condition: During the audit we noted the Authority did not have depository agreements with the banks. Cause: The Authority did not have all the necessary forms for single audit compliance. Effect: The director was in process of obtaining depository agreements. At year-end the Authority did not have collateral coverage at one institution. The Authority is not in compliance with Federal Award Programs. Recommendation: We would recommend the Authority completes the necessary forms with the bank to ensure compliance. Views of Responsible Official: Management agrees with the finding.

Audit Finding 2024-001 – Lack of Segregation of Duties Criteria: Internal control is a process, affected by the Traverse City Housing Commission'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 2024-003 – Depository Agreements Criteria: Code of Federal Regulations § 982.156 requires depository agreements to be deposited with a financial institution selected as depositary by the PHA in accordance with HUD requirements. Condition: During the audit we noted the Authority did not have depository agreements with the banks. Cause: The Authority did not have all the necessary forms for single audit compliance. Effect: The director was in process of obtaining depository agreements. At year-end the Authority did not have collateral coverage at one institution. The Authority is not in compliance with Federal Award Programs. Recommendation: We would recommend the Authority completes the necessary forms with the bank to ensure compliance. Views of Responsible Official: Management agrees with the finding.