Audit 366518

Finding Number 2024-002 In Process Type of Finding Significant Deficiency in Internal Control over Financial Reporting and Significant Deficiency in Internal Control over Compliance Federal Agency U.S. Dept. of Housing and Urban Development Federal Program Name Section 202 Capital Advance Assistance Listing Number 14.157 Federal Award Identification Number and Year WI39S971003-23Z-1998 Award Period 2024 HUD Code G - Unauthorized Loans from Project Funds Criteria Payroll expenses were over allocated to the property. Condition During audit procedures, it was noted that payroll expenses from a shared employee allocated to the property exceeded the appropriate amount.This resulted in a receivable from the management agent as of year-end. Questioned Costs $9,132 Cause The transition in ownership on April 30th contributed to delays in fully understanding the Project’s requirements and properly configuring payroll allocations within the accounting system. Effect The Project was charged for payroll expenses exceeding the shared employee’s actual hours during 2024. To correct this issue, a receivable was recorded at year-end, effectively resulting in an unauthorized loan to the management/ownership group. Repeat Finding No Recommendation Payroll allocations should be reviewed monthly to confirm that only the appropriate share of expenses is charged to the Project. Views of Responsible Officials and Planned Corrective Actions No disagreements with the finding. Management Response The issue arose due to a salary allocation being missed during the general ledger conversion. Management continues to review and establish procedures related to payroll allocations to ensure correct expenses are allocated to the Project.