Audit 409847

Finding # 2025-001 Type: Significant deficiency in internal controls over financial reporting Condition: Audit procedures identified a land acquisition financed through a promissory note that was not recorded when the transaction occurred. Context: The matter involved a significant noncash real estate development transaction that was nonroutine and outside the normal accounts payable process. Cause: The Organization did not have sufficiently formalized procedures to ensure timely communication and accounting evaluation of significant nonroutine transactions among housing development, management, and accounting personnel. Effect: Failure to timely identify and record a nonroutine real estate transaction resulted in an audit adjustment. Recommendation: We recommend that management establish procedures for housing development, management, and accounting personnel to timely communicate significant nonroutine transactions, including real estate acquisitions and development financing arrangements, to the finance department for accounting evaluation. Management Response: Management agrees with the finding and recommendation. Community Partners of Affordable Housing has enhanced procedures to identify and evaluate significant nonroutine transactions, including real estate acquisitions and development financing arrangements. Management has implemented a process for housing development, management, and accounting personnel to communicate significant or unusual transactions to the finance department early in the process so that related accounting considerations are evaluated before the consolidated financial statements are prepared. This process was implemented in November 2025 through regular meetings and pipeline and work-in-process updates. In addition, the finance department added a procedure to its monthly close process to ensure all nonrecurring transactions are considered. This monthly close procedure was implemented in August 2026.

Finding # 2025-002 Type: Significant deficiency in internal controls over financial reporting Condition: Audit procedures identified certain year-end cutoff adjustments related to grant revenue and predevelopment costs. Context: The adjustments related to timing differences identified during the year-end close process, including grant revenue earned in 2025 that was recorded when cash was received in 2026 and certain 2025 predevelopment costs that were not accrued at yearend. Cause: Year-end closing procedures did not include sufficient review of subsequent transactions to ensure all assets, liabilities, and related revenue were recorded in the proper period. Effect: As a result, certain assets, liabilities and revenue balances required adjustment to the financial statements to reflect activity in the proper reporting period. Recommendation: We recommend that management strengthen year-end accrual procedures, particularly for grant revenues and housing development activities, and include review of significant subsequent receipts and disbursements. This review should help ensure grant revenue and housing development activities are recorded in the proper period. Management Response: Management agrees with the finding and recommendation. Community Partners of Affordable Housing will strengthen year-end accrual procedures, particularly for grant revenues and housing development activities, and will include review of significant subsequent receipts and disbursements to help ensure grant revenue and housing development activities are recorded in the proper period.