Audit 404750

Material Weakness: As discussed on Finding 2023-001, we noted monthly reconciliations of bank accounts to the general ledger during the fiscal year ended September 30, 2023 were not being completed on a timely basis. Failure to perform timely reconciliations increases the risk that errors, misstatements, or unathorized transactions may not be detected and corrected promptly and could result in inaccurate financial reporting.

Condition: During our audit, we identified that a new loan issued under the EDA CARES 2 loan portfolio was not set up in the loan program or the general ledger at the correct loan amount. The original loan amount was $250,000; however, only $238,862.95 was recorded in both the general ledger and the loan program, and this incorrect amount was used for amortization purposes. The loan was paid off in the subsequent year for $11,137 less than the amount owed by the borrower at the time of payoff. Loans made should be posted to the general ledger and include amount of loan proceeds disbursed and all related loan costs.

Condition: During the audit, it was noted that the required annual reports filed for the EDA RLF CARES and USDA IRP loan programs did not match the general ledger balances for these programs. The primary causes of these discrepancies were untimely reconciliation of bank accounts and the deposit of loan payments into incorrect bank accounts. We recognize that these issues represent internal control deficiencies and increase the risk of inaccurate financial reporting and noncompliance with federal requirements.