Audit 37160

Finding 2022-001 ? Internal Controls over the Capital Fund Program and Capital Assets ? Significant Deficiency ? CFDA #14.850 & #14.872 Criteria ? Uniform Administrative Guidance and Standards for Internal Control in the Federal Government requires adequate internal controls over financial reporting to ensure that transactions are properly recorded and accounted for to permit the preparation of reliable financial statements and demonstrate compliance with laws, regulations, and other compliance requirements. Condition ? We examined the capital fund and related capital additions as part of our audit of the financial statements. We noted that in the prior audit period an accrual of $100,694 in grant CFP501-19 was not accounted for in the current period which resulted in grant revenue being overstated. We also noted that the client was tracking CFP costs incorrectly in their general ledger. Grant CFP501-19 costs were in excess of the grant amount by $120,900. These costs should have been expensed to grant CFP501-20 which consequently was understated by $102,010. This error was likely caused by the Authority using an interfund system involving the COCC whereby it pays for CFP costs and is reimbursed once draws are collected. We note that this is not an allowable practice. We have prepared journal entries to correct this for the audited financial statements. Failure to adequately track grant accounting can lead to misstatements in the financials and noncompliance with grant requirements. In the prior audit we noted that the Agency had a large outstanding Work in Process balance and we recommended that it be analyzed and moved to depreciable accounts. We note that the Authority has listened to that recommendation and moved $2,716,922 of 2016 bond additions to depreciable accounts. We find, however, that there is still a large amount of Work in Process that should be depreciated. CFP grants 501-17 and 501-18, which are fully spent, carry a $1,411,584 Work in Process balance at year end. Failure to move depreciable assets to the depreciation schedule in a timely manner distorts the financial statements and can lead to difficulties when attempting to accurately classify the assets on the depreciation schedule. As a mitigating factor we note that the Authority has had turnover in the capital fund tracking department and do not believe this to be a systemic issue. Effect ? The failure to properly account for CFP activity can result in noncompliance with laws and regulations related to grant programs. Failure to depreciate work in process in a timely manner can distort the financial statements and lead to difficulty in tracking physical assets. Recommendation ? We recommend that the Authority cease use of the interfund between CFP and the COCC and to track capital fund expenses and draws on a more direct basis. We recommend that current work in process be analyzed and reclassified to depreciable accounts.

Finding 2022-001 ? Internal Controls over the Capital Fund Program and Capital Assets ? Significant Deficiency ? CFDA #14.850 & #14.872 Criteria ? Uniform Administrative Guidance and Standards for Internal Control in the Federal Government requires adequate internal controls over financial reporting to ensure that transactions are properly recorded and accounted for to permit the preparation of reliable financial statements and demonstrate compliance with laws, regulations, and other compliance requirements. Condition ? We examined the capital fund and related capital additions as part of our audit of the financial statements. We noted that in the prior audit period an accrual of $100,694 in grant CFP501-19 was not accounted for in the current period which resulted in grant revenue being overstated. We also noted that the client was tracking CFP costs incorrectly in their general ledger. Grant CFP501-19 costs were in excess of the grant amount by $120,900. These costs should have been expensed to grant CFP501-20 which consequently was understated by $102,010. This error was likely caused by the Authority using an interfund system involving the COCC whereby it pays for CFP costs and is reimbursed once draws are collected. We note that this is not an allowable practice. We have prepared journal entries to correct this for the audited financial statements. Failure to adequately track grant accounting can lead to misstatements in the financials and noncompliance with grant requirements. In the prior audit we noted that the Agency had a large outstanding Work in Process balance and we recommended that it be analyzed and moved to depreciable accounts. We note that the Authority has listened to that recommendation and moved $2,716,922 of 2016 bond additions to depreciable accounts. We find, however, that there is still a large amount of Work in Process that should be depreciated. CFP grants 501-17 and 501-18, which are fully spent, carry a $1,411,584 Work in Process balance at year end. Failure to move depreciable assets to the depreciation schedule in a timely manner distorts the financial statements and can lead to difficulties when attempting to accurately classify the assets on the depreciation schedule. As a mitigating factor we note that the Authority has had turnover in the capital fund tracking department and do not believe this to be a systemic issue. Effect ? The failure to properly account for CFP activity can result in noncompliance with laws and regulations related to grant programs. Failure to depreciate work in process in a timely manner can distort the financial statements and lead to difficulty in tracking physical assets. Recommendation ? We recommend that the Authority cease use of the interfund between CFP and the COCC and to track capital fund expenses and draws on a more direct basis. We recommend that current work in process be analyzed and reclassified to depreciable accounts.

Finding 2022-001 ? Internal Controls over the Capital Fund Program and Capital Assets ? Significant Deficiency ? CFDA #14.850 & #14.872 Criteria ? Uniform Administrative Guidance and Standards for Internal Control in the Federal Government requires adequate internal controls over financial reporting to ensure that transactions are properly recorded and accounted for to permit the preparation of reliable financial statements and demonstrate compliance with laws, regulations, and other compliance requirements. Condition ? We examined the capital fund and related capital additions as part of our audit of the financial statements. We noted that in the prior audit period an accrual of $100,694 in grant CFP501-19 was not accounted for in the current period which resulted in grant revenue being overstated. We also noted that the client was tracking CFP costs incorrectly in their general ledger. Grant CFP501-19 costs were in excess of the grant amount by $120,900. These costs should have been expensed to grant CFP501-20 which consequently was understated by $102,010. This error was likely caused by the Authority using an interfund system involving the COCC whereby it pays for CFP costs and is reimbursed once draws are collected. We note that this is not an allowable practice. We have prepared journal entries to correct this for the audited financial statements. Failure to adequately track grant accounting can lead to misstatements in the financials and noncompliance with grant requirements. In the prior audit we noted that the Agency had a large outstanding Work in Process balance and we recommended that it be analyzed and moved to depreciable accounts. We note that the Authority has listened to that recommendation and moved $2,716,922 of 2016 bond additions to depreciable accounts. We find, however, that there is still a large amount of Work in Process that should be depreciated. CFP grants 501-17 and 501-18, which are fully spent, carry a $1,411,584 Work in Process balance at year end. Failure to move depreciable assets to the depreciation schedule in a timely manner distorts the financial statements and can lead to difficulties when attempting to accurately classify the assets on the depreciation schedule. As a mitigating factor we note that the Authority has had turnover in the capital fund tracking department and do not believe this to be a systemic issue. Effect ? The failure to properly account for CFP activity can result in noncompliance with laws and regulations related to grant programs. Failure to depreciate work in process in a timely manner can distort the financial statements and lead to difficulty in tracking physical assets. Recommendation ? We recommend that the Authority cease use of the interfund between CFP and the COCC and to track capital fund expenses and draws on a more direct basis. We recommend that current work in process be analyzed and reclassified to depreciable accounts.

Finding 2022-001 ? Internal Controls over the Capital Fund Program and Capital Assets ? Significant Deficiency ? CFDA #14.850 & #14.872 Criteria ? Uniform Administrative Guidance and Standards for Internal Control in the Federal Government requires adequate internal controls over financial reporting to ensure that transactions are properly recorded and accounted for to permit the preparation of reliable financial statements and demonstrate compliance with laws, regulations, and other compliance requirements. Condition ? We examined the capital fund and related capital additions as part of our audit of the financial statements. We noted that in the prior audit period an accrual of $100,694 in grant CFP501-19 was not accounted for in the current period which resulted in grant revenue being overstated. We also noted that the client was tracking CFP costs incorrectly in their general ledger. Grant CFP501-19 costs were in excess of the grant amount by $120,900. These costs should have been expensed to grant CFP501-20 which consequently was understated by $102,010. This error was likely caused by the Authority using an interfund system involving the COCC whereby it pays for CFP costs and is reimbursed once draws are collected. We note that this is not an allowable practice. We have prepared journal entries to correct this for the audited financial statements. Failure to adequately track grant accounting can lead to misstatements in the financials and noncompliance with grant requirements. In the prior audit we noted that the Agency had a large outstanding Work in Process balance and we recommended that it be analyzed and moved to depreciable accounts. We note that the Authority has listened to that recommendation and moved $2,716,922 of 2016 bond additions to depreciable accounts. We find, however, that there is still a large amount of Work in Process that should be depreciated. CFP grants 501-17 and 501-18, which are fully spent, carry a $1,411,584 Work in Process balance at year end. Failure to move depreciable assets to the depreciation schedule in a timely manner distorts the financial statements and can lead to difficulties when attempting to accurately classify the assets on the depreciation schedule. As a mitigating factor we note that the Authority has had turnover in the capital fund tracking department and do not believe this to be a systemic issue. Effect ? The failure to properly account for CFP activity can result in noncompliance with laws and regulations related to grant programs. Failure to depreciate work in process in a timely manner can distort the financial statements and lead to difficulty in tracking physical assets. Recommendation ? We recommend that the Authority cease use of the interfund between CFP and the COCC and to track capital fund expenses and draws on a more direct basis. We recommend that current work in process be analyzed and reclassified to depreciable accounts.