Audit 966

Finding 2023-003: Internal Control Structure Section 202 Capital Advance, 14.157 Material Weakness - Eligibility, Special Tests and Provisions Repeat Finding – Finding 2022-004 Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Section 202 Capital Advance program. Condition: The Authority only had one employee which makes it difficult for the Authority to have controls beyond the Authority Manager’s knowledge. As a result, we noted the Authority had a lack of segregation of duties related to all applicable compliance requirements. Cause: The Authority has limited resources and one staff. Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected. Recommendation: As noted above, the Authority has limited resources and additional controls are not financially feasible in the hiring of additional staff. In addition, the Board of Commissioners is considered a governing Board and the Board performing management or day-to-day activities is not recommended based on our previous experience and is not intended to be a solution to this situation. The Authority is a small entity and the lack of segregation of duties is common among entities with minimal employees and should be recognized as such. However, it is not our intent to establish internal controls as the Authority’s Board should make the final determination in the cost versus benefit. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.

Finding 2023-003: Internal Control Structure Section 202 Capital Advance, 14.157 Material Weakness - Eligibility, Special Tests and Provisions Repeat Finding – Finding 2022-004 Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Section 202 Capital Advance program. Condition: The Authority only had one employee which makes it difficult for the Authority to have controls beyond the Authority Manager’s knowledge. As a result, we noted the Authority had a lack of segregation of duties related to all applicable compliance requirements. Cause: The Authority has limited resources and one staff. Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected. Recommendation: As noted above, the Authority has limited resources and additional controls are not financially feasible in the hiring of additional staff. In addition, the Board of Commissioners is considered a governing Board and the Board performing management or day-to-day activities is not recommended based on our previous experience and is not intended to be a solution to this situation. The Authority is a small entity and the lack of segregation of duties is common among entities with minimal employees and should be recognized as such. However, it is not our intent to establish internal controls as the Authority’s Board should make the final determination in the cost versus benefit. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.