2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.
2022-001: Lack of Segregation of Duties Statement of Condition: There were conflicting duties related to most areas in the accounting department that did not provide an adequate segregation of duties, which is essential and an integral part of any internal control system. Criteria and Cause: A proper segregation of duties is designed to prevent one person from being in a position to initiate, authorize, execute, and record the same transaction. Our consideration of the Organization?s internal control system in the accounting department disclosed that, primarily due to the limited number of personnel in that department, an adequate segregation of duties was not in place and functioning. Effect: The lack of adequate segregation of duties over the financial reporting system increases the risk that errors or fraud may occur and not be detected in a timely manner. Recommendation: We recommend that consideration be given to employing additional staff in the accounting department, as needed, and reassigning conflicting duties to the extent possible so that no individual is in a position to initiate, authorize, execute and record the same transaction.
2022-002: Timely Reconciliations of Accounts Condition: The accounting department had not performed adequate account reconciliations to ensure that transactions were recorded accurately and timely. Key controls such as timely review of bank statements and reconciliations were not performed. Criteria and cause: In order to make the financial reports generated by the accounting system as meaningful as possible, and to catch errors or fraudulent activity in a timely manner, the Organization should, at a minimum, reconcile the general ledger accounts for cash, accounts receivable, and accounts payable on a monthly basis. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period, which makes it easier to perform future reconciliations. It is our understanding that the reconciliations were not prepared timely because key employees of the financial reporting processes left during the year, there was a limited number of personnel available to perform the reconciliations, and existing policies and procedures were not being followed. Effect: The financial reports generated by the Organization were not as meaningful or accurate as they could have or should have been for use in the management decision-making process. Misstated financial statements and/or misappropriations of assets due to error or fraud could occur and not be prevented or detected in a timely manner. Recommendation: We recommend policies be implemented whereby all the general ledger accounts are reconciled to supporting documentation on a monthly basis. We also recommend appropriate management-level personnel conduct timely reviews of all reconciliations and document such review by indicating who reviewed it and when.
2022-003: Failure to adjust monthly reserve for replacement deposit when the new amount of funds authorized by HUD became effective ? HUD entities Condition: A portion of the required monthly deposits to the reserve for replacement account are delinquent for certain HUD entities. Criteria and cause: In accordance with Paragraph 5(a) of the HUD Regulatory Agreement, the Project shall maintain a reserve fund for replacements in a separate account and deposit an amount approved by HUD. The Project was not notified by HUD of the approval of the increase in the monthly reserve for replacement deposit until subsequent to year end. Effect: The deposits to the replacement reserve account were not made in accordance with the HUD Regulatory Agreement. Recommendation: The management agent should establish a method for monthly deposits and assign an individual responsible for ensuring timely and accurate completion.