I. VIA HOPE 2023 MANAGEMENT CORRECTIVE ACTION PLAN:
► BACKGROUND: CONTINUATION, ADDRESS MULTI-YEAR
FRAUD: STRENGTHEN INTERNAL CONTROLS:
Management and staff continue to work with the insurance carrier and local
law enforcement agencies to restore funds and strengthen its internal
controls.
► Update:...
I. VIA HOPE 2023 MANAGEMENT CORRECTIVE ACTION PLAN:
► BACKGROUND: CONTINUATION, ADDRESS MULTI-YEAR
FRAUD: STRENGTHEN INTERNAL CONTROLS:
Management and staff continue to work with the insurance carrier and local
law enforcement agencies to restore funds and strengthen its internal
controls.
► Update: History and Board Actions:
In FY 2021, Via Hope experienced a significant loss of revenue due to the
ending of contracts from its two primary funding streams – the Health and
Human Services Commission and the Hogg Foundation for Mental Health.
This loss of revenue resulted in the Board recommending and approving the
reduction of staff and the departure of the CEO.
In FY 2022, the Board recommended and approved the termination of its
Accounts Manager and the former Board Chairman stepped in to voluntarily
manage the finances until the organization could make other arrangements.
The former chairman stepped down from his role and an election of officers
was held to install a new Chair.
By January 2022, with new revenue coming into the organization, the Board
selected a new CEO and in December 2022, a new accounts manager was
hired. Once the new accounts manager began reconciling the accounts, a
pattern of questionable expenditures became evident with PayPal and other
accounts. The CEO and staff informed the Board of what appeared to have
happened and recognizing its fiduciary responsibility, the Board approved
the engagement of a forensic audit by an external audit firm, The Wesley
Peachtree Group (WPG) of Atlanta, Georgia.
The forensic audit resulted in findings that fraudulent activity in the amount
of $233,000 was likely to have occurred. As a result, the CEO was instructed
to file an insurance claim with Frost Insurance. To process the claim, Frost
required the involvement of law enforcement which was approved by the
Board. Formal investigations were launched and remain ongoing with the
Austin Police Department and the Travis County District Attorney's office.
Recently, law enforcement met with the Board and provided an update on
the investigation. Subsequently, the CEO was requested to follow up with
the insurance carrier and state regulatory agencies to ensure the prompt
receipt of its insurance claim from PayPal and other potential sources.
II. FINDINGS AND RECOMMENDATIONS:
Finding 2023-001 - Internal Control Deficiencies (Material Weakness)
a) Time and Effort, Payroll and Human Resource Forms and Contracts - In
response to the finding, Management will require monthly Time and Effort reports
for each employee, develop new human resource forms, and update staff
contracts at the beginning of the fiscal year.
b) Drawdowns and Written Approvals - With the addition of the new Finance staff
member in January 2025, management will initiate a written approval process. All
payroll adjustments, drawdowns, credit card purchases, and payments will
require invoices, receipts, and written approvals before payment is made. The
Accounting Manager will also work with the CEO to ensure that staff provide
receipts promptly and that journal entries are recorded on a monthly basis.
c) Receipts, Written Approvals, PP&E Schedule - Receipts and written approvals
were addressed in Response (C). While the organization maintains an equipment
log, we will establish a formal Property, Plant, and Equipment Schedule (PP&E),
particularly noting equipment purchased with federal funds.
d) Segregation of Duties - Management has begun the process of interviewing
qualified staff to segregate duties in the Finance office. This will ensure that one
individual will no longer be responsible for handling funds, payments,
reconciliations, and General Ledger (GL) postings. The individual will be in place
by January 2025.