Audit 390475

2024-001 Internal Control over Financial Close and Reporting - Account Reconciliations (Material Weakness) Criteria or Specific Requirements: The Housing Authority is responsible for maintaining adequate internal controls over its accounting records, account balances, and financial statement disclosures. An accounting system should provide timely and accurate information for management. The reconciliation of account balances is an integral internal control activity to determine that stated account balances are accurate and fairly reported. The Housing Authority management and accounting personnel should reconcile general ledger accounts to subsidiary ledgers and other supporting documents in a timely and effective manner. Condition: The Housing Authority lacks an effective internal control structure over its year-end financial close and reporting process to allow for timely and accurate financial reporting. Internal controls have not been implemented to ensure that all general ledger balances including accounts receivable, grants receivable, unearned revenue, capital assets, and accrued annual leave are properly reconciled. As a result, both the auditors and the auditee spent a substantial amount of time addressing these areas. Consequently, significant adjusting journal entries were required to correct account balances, leading to the restatement of fund balances and net position balances. Cause: The Housing Authority did not perform adequate reconciliations of the accounts listed above to verify the completeness, validity, and accuracy of its financial records. Additionally, there was a lack of established internal controls and processes over the financial reporting process to ensure timely and accurate financial reporting. Effect: Without establishing adequate internal controls and year-end reconciliation procedures, the Housing Authority’s balances lack certainty about the accuracy of the balances. Not following established financial close and reporting policies and procedures can result in the potential for material misstatements of the monthly and annual financial statements. Auditor's Recommendation: The Housing Authority's management should implement effective internal control that ensures all significant matters impacting the accounting records and financial statements are evaluated for proper accounting treatment in a timely manner. Unresolved discrepancies should be thoroughly investigated and corrected in a timely manner. Furthermore, management should implement policies and procedures requiring accountability to monitor the accuracy of monthly reconciliations. This will allow the Housing Authority to ensure completeness and accuracy, enhancing the control system in the accounting department. Funding Agency Title Federal Assistance Listing Number(s) Award Year and Number U.S. Department of Housing and Urban Development Indian Housing Block Grants and Indian Housing Block Grants - ARP Act 14.867 2024; 55IH0402180 and 21AH0402180 The material weakness in audit findings in relation to financial statements 2024-001 also applies to these programs.

2024-002 Late Single Audit Submission (Significant Deficiency) Criteria or Specific Requirements: Section 200.512(a)(1) Report Submission of the Office of Management and Budget’s Uniform Guidance outlines the following requirement: “The audit must be completed, and the data collection form must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period.” Condition: The Housing Authority did not submit the single audit reporting package to the Federal Audit Clearinghouse within nine months following their fiscal year-end as required (deadline of September 30, 2025). Cause: The Housing Authority was unable to provide the necessary audit documentation timely due to improper record retention. Effect: Noncompliance with the Office of Management and Budget’s Uniform Guidance. Potential reduction or delay in federal and state funding, as well as the effects of being placed on high-risk status by a federal and/or state agency. Auditor's Recommendation: Management should develop and implement policies regarding the retention of records and audit documentation.